Eliminating Private Mortgage Insurance

For loans made after 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 achieves 22 percent equity. (Some "higher risk" mortgage loans are not included.) But if your equity reaches 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a loan that past July 1999).

Do your homework

Familiarize yourself with your loan statements to keep your eye on principal payments. Pay attention to the purchase prices of other houses in your neighborhood. If your mortgage is under five years old, it's likely you haven't paid down much principal � you have paid mostly interest.

Verify Equity Amount

You can begin the process of canceling PMI as soon as you calculate that your equity has risen to 20%. You will first let your lender know that you are asking to cancel PMI. Next, you will be required to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and almost all lenders require one before they'll cancel PMI.

At Ward Kilduff Mortgage, we answer questions about PMI every day. Call us: (860) 658-7100.

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