Mortgage Help   Mortgage Rates Real Estate Credit Foreclosure Tax Mortgage Rates Mortgage Basics Chapter 1: How much house can you afford? Homeownership Should You Buy or Rent Summary   Chapter 2: Adjustable-rate mortgages ARM and a fixed-rate mortgage Fixed-rate mortgages Understanding the key elements Which type of lender is right for you? Other types of mortgages Subprime Summary   Chapter 3: Your credit score Down Payment How lenders set rates Low down payments Mortgage insurance Your mortgage payment Mortgage Points Summary   Chapter 4: The good faith estimate Inspection and Insurance Necessary paperwork for a buyer Other lender paperwork Paperwork and fees Prequalification and preapproval Special circumstances Summary   Chapter 5: Ten questions to ask Turned down for a mortgage Underwriting What lenders ask Summary   Chapter 6:  Understanding the closing process Escrow Summary   Chapter 7: When your mortgage is sold Avoiding foreclosure Paying ahead Payment changes Refinancing Removing mortgage insurance Summary  Removing mortgage insurance If you put less than a 20% down payment on your home loan, you were probably required to purchase private mortgage insurance to cover your lender against your potential default on the mortgage. Once you have gained 20% equity in the home, you will want to cancel the mortgage insurance. If you have an FHA-insured mortgage, you will not be able cancel it. You are required to pay mortgage insurance for the life of the loan. Your lender is required by law to tell you at closing how many months and years you will need to pay for mortgage insurance. Most home buyers request the insurance be canceled once their loan balance hits 80% of the home's appraised value. When the balance reaches 78%, the lender is required to automatically cancel the mortgage insurance. You should receive an annual statement that lists who to call about canceling your mortgage insurance. Lenders are allowed to require mortgage insurance from high-risk borrowers until the principal balance is less than 50% of the home's value. If you have missed payments, you may fall into the high-risk category. Make sure that all of your payments are up to date before you request the mortgage insurance be dropped. To find out how much equity you have in your home, you simply subtract the mortgage balance from the appraised valued of the property. To find the percentage of equity you have, you divide the equity by the value. For example, if your home appraises for $200,000 and you owe $150,000, your equity is $50,000. You have 25% equity in the home. If you are unable to persuade your lender to drop your mortgage insurance, you should consider refinancing. If your home value has increased, the new lender probably won't require mortgage insurance. Sit down and compare the refinancing costs to the savings you would get by eliminating the mortgage insurance. You can get out of your mortgage insurance sooner than planned by: " Prepaying your mortgage - even $50 each month will dramatically increase your equity over time. " Have the home appraised - if the area you live in is experiencing home value increases, you may want to have your home re-appraised. This will cost you between $300 and $500 dollars. Remodel or improve your home - by adding features to your home, you can increase the market value of your home and the equity you have in it.