Goodbye, PMI!

Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity climbs to higher than twenty-two percent. (The legal obligation does not cover certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage closing past July '99), no matter the original purchase price, after the equity reaches twenty percent.

Keep a record of payments

Review your loan statements often. Find out the purchase prices of other houses in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

The Proof is in the Appraisal

When you determine you've achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lenders will require one before they agree to cancel PMI.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Call us at 2817780805.