Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips below 78% of the purchase price, they do not have to take similar action if the loan's equity is above 22%. (There are some loans that are not covered by this law -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage that closed after July '99), without considering the original price of purchase, at the point your equity gets to twenty percent.

Verify the numbers

Review your statements often. Also be aware of what other homes are being sold for in your neighborhood. Unfortunately, if you have a new loan - five years or fewer, you likely haven't begun to pay very much of the principal: you are paying mostly interest.

Verify Eligibility

At the point your equity has reached the required twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will request proof that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel PMI.

First Community Bank of Central Al. can answer questions about PMI and many others. Give us a call at (334) 285-8850.

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