Goodbye, PMI!

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of that year) goes under seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to over twenty-two percent. (There are some loans that are excluded -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your loan closing past July '99), regardless of the original purchase price, after your equity rises to twenty percent.

Verify the numbers

Keep a running total of money going toward the principal. Also be aware of how much other homes are purchased for in your neighborhood. Unfortunately, if you have a recent loan - five years or under, you probably haven't started to pay a lot of the principal: you have been paying mostly interest.

Proof of Equity

At the point your equity has reached the required twenty percent, you are close to canceling your PMI payments, once and for all. You will first tell your lender that you are requesting to cancel PMI. Then you will be asked to verify that you have at least 20 percent equity. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

At Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234, we answer questions about PMI every day. Give us a call: 2146635355.