Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of your purchase price � but not when the borrower earns 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a mortgage loan that closed past July '99), no matter the original price of purchase, after the equity rises to twenty percent.

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also keep track of what other homes are selling for in your neighborhood. Unfortunately, if yours is a new mortgage - five years or under, you probably haven't started to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

You can begin the process of canceling your PMI as soon as you calculate that your equity reaches 20%. You will first tell your lender that you are requesting to cancel PMI. Lenders request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

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