Make Private Mortgage Insurance a Thing of the Past

Although lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (There are some exceptions -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage closing after July '99), without considering the original purchase price, at the point the equity reaches twenty percent.

Do your homework

Review your statements often. Find out the purchase prices of other homes in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't gone down much.

Proof of Equity

You can begin the process of canceling PMI when you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be required to submit proof that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

American Mortgage Advisers, Inc can answer questions about PMI and many others. Call us at 2147390569.