Goodbye, PMI!

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of your purchase price � but not when the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) But if your equity reaches 20% (regardless of the original purchase price), you can cancel the PMI (for a mortgage closed after July 1999).

Keep a record of payments

Familiarize yourself with your monthly statements to keep your eye on principal payments. Find out the purchase prices of other homes in your immediate area. If your mortgage is fewer than five years old, chances are you haven't paid down much principal � you have been paying mostly interest.

The Proof is in the Appraisal

You can start the process of canceling your PMI at the time you calculate that your equity reaches 20%. Contact your lending institution to request cancellation of PMI. The lending institution will ask for proof that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.

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 at 2146635355.