Eliminating Private Mortgage Insurance

For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (The law does not cover a number of higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity gets to 20 percent, no matter the original purchase price.

Verify the numbers

Keep a running total of money going toward the principal. Find out the selling prices of other homes in your immediate area. If your loan is fewer than five years old, chances are you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

At the point your equity has reached the magic number of twenty percent, you are not far away from stopping your PMI payments, once and for all. Call the mortgage lender to ask for cancellation of your PMI. Lending institutions request documentation verifying your 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.

Chris Caggiano - Grand Oaks Funding, LLC can help find out if you can eliminate your PMI. Call us at (718) 477-4405.

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