Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of '99) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to twenty-two percent or higher. (Certain "higher risk" mortgage loans are not included.) But you are able to cancel PMI yourself (for loans closed after July 1999) when your equity gets to 20 percent, regardless of the original price of purchase.

Do your homework

Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also be aware of the price that other homes are being sold for in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

You can start the process of canceling your PMI when you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. 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 agree to cancel.

U.S.A. Lending, Inc. can answer questions about PMI and many others. Call us: 305-967-7200.