Private Mortgage Insurance

If you buy a house with less than a 20% down payment, most lenders require private mortgage insurance (PMI) - and the premiums, typically ranging from $25 to $100 per month, are taken out of your hide. But you are not stuck with PMI forever. Once your equity exceeds 20% of the home's value (in some instances, the percentage may be more), your lender is required to let you drop the coverage. So if you've paid down enough of the principal and/or if your home has appreciated sufficiently to increase your equity to more than 20% -- you should be able to avoid those annoying PMI premiums. Here's how:

If you purchased your home after July 1999. When the balance of your mortgage reaches 80% of the original value of the property (an appraisal will probably be required), you may request in writing that PMI be canceled. When the balance of the mortgage reaches 78% of the original value of the property, the lender must automatically terminate PMI, provided that mortgage payments are current.

If you purchased your home before August 1999. The ball is in your court to contact the lender and prove that you qualify for termination of PMI according to the lender's stipulations. The lender is required to provide an annual written statement detailing the rights of the borrower to cancel PMI should qualifications be met.

Whatever your situation may be, if you have PMI it's in your best interest to make sure you aren't among the many homeowners who are needlessly paying PMI premiums.