Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for mortgages closed past July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.

Do your homework

Keep track of each principal payment. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't started to pay very much of the principal: you are paying mostly interest.

Verify Eligibility

Once your equity has reached the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI. The lending institution will ask for documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At New Millennium Mortgage Co. NMLS: 331173, we answer questions about PMI every day. Give us a call at (941) 366-5800.