Goodbye, PMI!

For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a loan closing past July '99), without considering the original price of purchase, after your equity reaches twenty percent.

Verify the numbers

Familiarize yourself with your mortgage statements to keep a running total of principal payments. Pay attention to the prices of other houses in your immediate area. Unfortunately, if you have a new mortgage - five years or fewer, you likely haven't had a chance to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has risen to the desired twenty percent, you are not far away from canceling your PMI payments, once and for all. First you will tell your lender that you are requesting to cancel your PMI. The lending institution will request documentation that your equity is at 20 percent or above. You can acquire documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

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

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