Eliminating Private Mortgage Insurance

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of the purchase price � but not at the point the borrower earns 22 percent equity. (The legal obligation does not cover some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage loan closing after July '99), no matter the original purchase price, once the equity climbs to twenty percent.

Do your homework

Study your statements often. Also be aware of how much other homes are being sold for in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.

Proof of Equity

You can start the process of PMI cancelation when you determine your equity reaches 20%. Contact the lending institution to ask for cancellation of your PMI. The lending institution will require proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel.

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