Eliminating Private Mortgage Insurance

For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are exceptions -like a number of "high risk' loans.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a mortgage loan closed after July 1999).

Keep track of payments

Keep a running total of money going toward the principal. Make yourself aware of the purchase prices of other homes in your neighborhood. If your mortgage is fewer than five years old, probably you haven't greatly reduced principal � you have paid mostly interest.

Verify Equity Amount

You can start the process of PMI cancelation as soon as you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

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