Canceling Private Mortgage Insurance

Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the point the borrower's equity climbs to twenty-two percent or more. (This legal requirment does not apply to certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a loan closing after July '99), no matter the original purchase price, once your equity gets to twenty percent.

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to be aware of the prices of the houses that sell in your neighborhood. If your loan is fewer than five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.

Verify Equity Amount

At the point your equity has reached the magic number of twenty percent, you are not far away from stopping your PMI payments, once and for all. You will first let your lender know that you are asking to cancel PMI. Next, you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and almost all lending institutions request one before they agree to cancel.

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