Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of your purchase amount � but not when the loan reaches 22 percent equity. (A number of "higher risk" loan programs are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), without considering the original price of purchase, when your equity rises to twenty percent.

Do your homework

Keep a running total of your principal payments. Make yourself aware of the purchase prices of other homes in your immediate area. If your loan is under five years old, it's likely you haven't paid down much principal � you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has risen to the required twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. First you will let your lending institution know that you are requesting to cancel PMI. Then you will be required to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At VALoansMN.com, we answer questions about PMI every day. Give us a call at (612) 240-9922.

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