Goodbye, PMI!

While lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (This law does not apply to a number of higher risk mortgages.) But if your equity gets to 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage loan that after July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep track of principal payments. Also be aware of how much other homes are purchased for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't had a chance to pay much of the principal: you have been paying mostly interest.

Verify Eligibility

You can begin the process of canceling PMI as soon as you're sure your equity has reached 20%. Call the lending institution to ask for cancellation of PMI. Lending institutions ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

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