Eliminating Private Mortgage Insurance

Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity gets to higher than twenty-two percent. (A number of "higher risk" loan programs are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing past July '99), without considering the original purchase price, once the equity climbs to twenty percent.

Keep a record of payments

Review your mortgage statements often. Make yourself aware of the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent mortgage - five years or under, you likely haven't had a chance to pay very much of the principal: you are paying mostly interest.

Proof of Equity

As soon as your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, once and for all. First you will let your lending institution know that you are asking to cancel your PMI. The lending institution will ask for proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel PMI.

At American Mortgage Advisers, Inc, we answer questions about PMI every day. Call us at 2148657442.