Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" morgages are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed past July '99), without considering the original purchase price, after the equity rises to twenty percent.

Keep a running total of payments

Study your statements often. Find out the purchase prices of other homes in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't begun to pay much of the principal: you are paying mostly interest.

Proof of Equity

You can begin the process of canceling PMI at the time you you think that your equity has risen to 20%. You will first notify your lender that you are asking to cancel PMI. Lending institutions request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel.

At Refresh Funding, we answer questions about PMI every day. Call us: 305-800-3863.

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