Goodbye, PMI!

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of your purchase amount � but not at the point the borrower earns 22 percent equity. (This law does not cover some higher risk mortgages.) But if your equity gets to 20% (regardless of the original purchase price), you can cancel PMI (for a loan that after July 1999).

Keep track of payments

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also keep track of the price that other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal � it's been mostly interest.

Proof of Equity

At the point your equity has reached the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will first let your lending institution know that you are requesting to cancel your PMI. Next, you will be required to submit proof that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

MS Investment Mortgage Company can answer questions about PMI and many others. Call us at (858) 485-5800.