Make Private Mortgage Insurance a Thing of the Past

While lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes under 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed past July '99), no matter the original purchase price, once the equity climbs to twenty percent.

Do your homework

Keep track of each principal payment. Also be aware of what other homes are selling for in your neighborhood. If your loan is under five years old, probably you haven't made much progress with the principal � you have paid mostly interest.

Verify Eligibility

Once you find you've reached 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI. Then you will be required to submit documentation that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lenders will require one before they'll cancel PMI.

At Lighthouse Mortgage Company, we answer questions about PMI every day. Call us: (916) 434-8915.

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