Goodbye, PMI!

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For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of your purchase amount - but not when the loan reaches 22 percent equity. (This legal requirement does not include some higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgage loans made after July 1999) once your equity gets to 20 percent, without consideration of the original purchase price.

Do your homework

Familiarize yourself with your monthly statements to keep a running total of principal payments. Also keep track of what other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.

Proof of Equity

As soon as your equity has risen to the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be required to submit documentation that you are eligible to cancel. You can get proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

American Hero Mortgage can help find out if you can eliminate your PMI. Call us: 754-202-4376.

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