Goodbye, PMI!

For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78 percent of the purchase amount � but not when the borrower achieves 22 percent equity. (Some "higher risk" morgages are not included.) But if your equity gets to 20% (no matter what the original price was), you are able to cancel the PMI (for a loan closed after July 1999).

Verify the numbers

Keep a running total of your principal payments. You'll want to keep track of the the purchase amounts of the houses that are selling around you. Unfortunately, if yours is a recent mortgage loan - five years or under, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.

Verify Eligibility

Once your equity has reached the desired twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. Call your mortgage lender to ask for cancellation of your PMI. Then you will be required to verify that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions will require one before they agree to cancel PMI.

Cottingham Mortgage Inc. can help find out if you can eliminate your PMI. Call us at (800) 288-9693.

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