Eliminating Private Mortgage Insurance

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity gets to twenty-two percent or higher. (Some "higher risk" mortgage loans are not included.) But you can actually cancel PMI yourself (for mortgages made after July 1999) when your equity reaches 20 percent, without consideration of the original purchase price.

Verify the numbers

Analyze your loan statements often. You'll want to keep track of the the purchase prices of the houses that sell around you. If your mortgage is fewer than five years old, chances are you haven't paid down much principal � you have been paying mostly interest.

Proof of Equity

You can begin the process of PMI cancelation as soon as you determine your equity reaches 20%. Call the lending institution to request cancellation of your PMI. Then you will be required to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At First Community Bank of Central Al., we answer questions about PMI every day. Call us at (334) 285-8850.

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