Goodbye, PMI!

For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of the purchase amount � but not when the borrower earns 22 percent equity. (This legal requirment does not apply to certain higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity reaches 20 percent, without consideration of the original price of purchase.

Keep track of payments

Keep a running total of money going toward the principal. Pay attention to the selling prices of other houses in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.

Verify Equity Amount

You can start the process of PMI cancelation when you you think that your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions require paperwork verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At America's Money Source, we answer questions about PMI every day. Call us: 4078987559.