Goodbye, PMI!

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Some "higher risk" mortgage loans are not included.) But if your equity rises to 20% (regardless of the original price of purchase), you have the legal right to cancel your PMI (for a mortgage closed past July 1999).

Verify the numbers

Keep track of each principal payment. You'll want to be aware of the the purchase prices of the houses that are selling around you. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.

Proof of Equity

Once your equity has risen to the desired twenty percent, you are close to canceling your PMI payments, for the life of your loan. First you will let your lender know that you are asking to cancel your PMI. Lending institutions request proof of eligibility at this point. 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.

U.S.A. Lending, Inc. can help find out if you can eliminate your PMI. Call us at 305-967-7200.