Goodbye, PMI!

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For loans made since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of the purchase amount - but not when the borrower achieves 22 percent equity. (A number of "higher risk" mortgages are not included.) However, you are able to cancel PMI yourself (for loans closed past July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.

Do your homework

Keep a running total of your principal payments. You'll want to stay aware of the the purchase amounts of the houses that sell around you. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't had a chance to pay very much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. Contact your lending institution to ask for cancellation of PMI. Lenders request proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Ace One Mortgage LLC, we answer questions about PMI every day. Call us: 866-313-0412.