Goodbye, PMI!

Although lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is above 22%. (The law does not cover a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgages made after July 1999) at the point your equity rises to 20 percent, without consideration of the original price of purchase.

Verify the numbers

Study your statements often. Make yourself aware of the purchase prices of other homes in your neighborhood. Unfortunately, if you have a new loan - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

Once your equity has risen to the desired twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. You will need to contact your lending institution to let them know that you want to cancel PMI. Next, you will be asked 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 all the proof you need � and your lender will probably request one before they agree to cancel PMI.

At First Community Bank of Central Al., we answer questions about PMI every day. Give us a call: (334) 285-8850.

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