Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of the purchase amount � but not at the point the borrower earns 22 percent equity. (The law does not apply to a number of higher risk mortgages.) But if your equity reaches 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage closed past July 1999).

Verify the numbers

Keep track of your principal payments. Also keep track of the price that other homes are being sold for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

Verify Eligibility

At the point your equity has risen to the magic number of twenty percent, you are close to canceling your PMI payments, once and for all. You will first tell your lender that you are asking to cancel your PMI. Lending institutions ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

At BeneGroup, Inc., we answer questions about PMI every day. Give us a call: 4083956018.