Eliminating Private Mortgage Insurance

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase amount � but not at the point the borrower earns 22 percent equity. (There are some loans that are not included -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for mortgage loans closed past July 1999) when your equity rises to 20 percent, without consideration of the original purchase price.

Verify the numbers

Familiarize yourself with your loan statements to keep a running total of principal payments. Make yourself aware of the prices of other houses in your immediate area. If your mortgage is fewer than five years old, probably you haven't greatly reduced principal � it's been mostly interest.

Proof of Equity

When you think you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to contact your lending institution to alert them that you wish to cancel PMI payments. Then you will be required to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

Alternative Mortgage Group can answer questions about PMI and many others. Give us a call at 561-395-4264.