Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of that year) goes down below seventy-eight percent of the purchase price, but not at the point the loan's equity gets to twenty-two percent or higher. (The legal obligation does not cover a number of higher risk mortgages.) However, if your equity gets to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a loan that after July 1999).

Keep track of payments

Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to keep track of the prices of the homes that are selling in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal � you have paid mostly interest.

The Proof is in the Appraisal

When you determine you've achieved at least 20 percent equity, you can start the process of getting PMI out of your budget. You will first let your lender know that you are asking to cancel PMI. Next, you will be required to submit documentation that you are eligible to cancel. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

At BeneGroup, Inc., we answer questions about PMI every day. Give us a call: 4083956018.