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Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or more. (This law does not cover some higher risk mortgages.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a loan that after July 1999).

Keep a record of payments

Study your statements often. You'll want to stay aware of the the purchase prices of the homes that sell around you. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal most likely hasn't gone down much.

Verify Equity Amount

At the point you find you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. First you will let your lender know that you are requesting to cancel PMI. Your lender will request documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lenders will require one before they agree to cancel PMI.

At One Source Lending 303-220-7500, we answer questions about PMI every day. Give us a call at 303-220-7500.