Make Private Mortgage Insurance a Thing of the Past

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 below 78 percent of your purchase amount � but not at the point the borrower earns 22 percent equity. (This law does not include some higher risk mortgages.) However, if your equity rises to 20% (regardless of the original purchase price), you have the right to cancel PMI (for a loan that past July 1999).

Do your homework

Keep a running total of each principal payment. You'll want to keep track of the prices of the homes that sell in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you probably haven't been able to pay very much of the principal: you are paying mostly interest.

Verify Eligibility

Once you determine you have achieved at least 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. Contact the mortgage lender to ask for cancellation of PMI. Then you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably require one before they agree to cancel PMI.

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

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