Eliminating Private Mortgage Insurance

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed after July of that year) goes below seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (Certain "higher risk" mortgage loans are excluded.) The good news is that you can cancel your PMI yourself (for a loan closing after July '99), no matter the original purchase price, once your equity climbs to twenty percent.

Keep track of payments

Review your mortgage statements often. Also keep track of the price that other homes are purchased for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.

Verify Eligibility

You can start the process of PMI cancelation as soon as you you think that your equity reaches 20%. Contact the mortgage lender to request cancellation of your Private Mortgage Insurance. Lending institutions ask for 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 home's equity and eligibility for PMI cancellation.

At Ameritrust Mortgage Associates,LLC (NMLS#167664), we answer questions about PMI every day. Give us a call at 5614179221.