Goodbye, PMI!

For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (This legal requirment does not apply to certain higher risk mortgages.) However, if your equity rises to 20% (no matter what the original price was), you can cancel PMI (for a loan that after July 1999).

Verify the numbers

Familiarize yourself with your loan statements to keep track of principal payments. Also keep track of the price that other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

At the point you find you have achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. Call the mortgage lender to request cancellation of your PMI. Your lender will request documentation that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can answer questions about PMI and many others. Call us: 214-663-5355.