Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the equity is above 22%. (There are some loans that are not included -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgage loans made after July 1999) when your equity reaches 20 percent, without consideration of the original purchase price.

Keep a record of payments

Keep track of money going toward the principal. You'll want to stay aware of the the purchase prices of the homes that are selling in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't begun to pay very much of the principal: you are paying mostly interest.

Proof of Equity

You can start the process of canceling PMI when you determine your equity reaches 20%. First you will notify your lender that you are asking to cancel your PMI. Lenders request documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they'll cancel PMI.

MidTowne Mortgage can answer questions about PMI and many others. Give us a call: (478) 746-2063.

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