Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to over twenty-two percent. (There are exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage loan closed past July 1999).

Keep a running total of payments

Review your statements often. Find out the selling prices of other houses in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you likely haven't had a chance to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will need to call the lending institution to alert them that you want to cancel PMI. Your lender will require proof that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount - and your lender will probably require one before they agree to cancel PMI.