Eliminating Private Mortgage Insurance

For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (Certain "higher risk" loan programs are not included.) But if your equity rises to 20% (regardless of the original price of purchase), you are able to cancel PMI (for a mortgage loan that after July 1999).

Verify the numbers

Analyze your loan statements often. You'll want to be aware of the the purchase prices of the houses that are selling around you. If your mortgage is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.

Proof of Equity

As soon as your equity has risen to the required twenty percent, you are close to canceling your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lending institutions require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they'll cancel PMI.

At BeneGroup, Inc., we answer questions about PMI every day. Call us: 4083956018.