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Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lenders are required (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 at the point the borrower earns 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) But you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity rises to 20 percent, without consideration of the original price of purchase.

Keep a record of payments

Keep a running total of each principal payment. You'll want to be aware of the the purchase prices of the homes that are selling in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.

Proof of Equity

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 notify your lender that you are asking to cancel PMI. The lending institution will request documentation that your equity is high enough. 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.

At Greystone Loans, Inc., we answer questions about PMI every day. Call us: (909) 467-1090.

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