Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of the purchase amount � but not at the point the borrower earns 22 percent equity. (Certain "higher risk" loan programs are excluded.) But if your equity reaches 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a mortgage loan that after July 1999).

Verify the numbers

Familiarize yourself with your loan statements to keep track of principal payments. You'll want to stay aware of the the purchase prices of the homes that sell in your neighborhood. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal most likely hasn't gone down much.

The Proof is in the Appraisal

You can begin the process of PMI cancelation at the time you determine your equity reaches 20%. First you will let your lender know that you are requesting to cancel PMI. Your lender will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

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