Make Private Mortgage Insurance a Thing of the Past

Although lending institutions have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is above 22%. (Some "higher risk" mortgage loans are excluded.) But you can actually cancel PMI yourself (for mortgages made past July 1999) when your equity rises to 20 percent, without consideration of the original price of purchase.

Do your homework

Analyze your statements often. Make yourself aware of the prices of other homes in your immediate area. If your mortgage is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.

Proof of Equity

At the point you find you have achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. Contact the lending institution to request cancellation of your Private Mortgage Insurance. Lenders ask for paperwork verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.

First Community Bank of Central Al. can answer questions about PMI and many others. Call us: (334) 285-8850.

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