Eliminating Private Mortgage Insurance

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (Some "higher risk" morgages are not included.) But if your equity reaches 20% (no matter what the original purchase price was), you have the legal right to cancel your PMI (for a loan that after July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Make yourself aware of the prices of other houses in your immediate area. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal � you have paid mostly interest.

The Proof is in the Appraisal

Once you find you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to call the mortgage lender to alert them that you wish to cancel PMI payments. Lenders require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably require one before they agree to cancel.

U.S.A. Lending, Inc. can help find out if you can eliminate your PMI. Give us a call: 305-967-7200.