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 your purchase price � but not when the borrower earns 22 percent equity. (A number of "higher risk" morgages are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage that closed after July '99), no matter the original purchase price, after the equity rises to twenty percent.

Verify the numbers

Familiarize yourself with your monthly statements to keep your eye on principal payments. Find out the selling prices of other homes in your neighborhood. If your loan is under five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.

Verify Equity Amount

You can start the process of PMI cancelation as soon as you're sure your equity has risen to 20%. Contact your lending institution to ask for cancellation of your PMI. Lenders require proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

At Chris Caggiano - Grand Oaks Funding, LLC, we answer questions about PMI every day. Give us a call at (718) 477-4405.

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