Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (The legal obligation does not apply to a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgage loans made after July 1999) once your equity gets to 20 percent, no matter the original purchase price.

Keep a record of payments

Keep a running total of money going toward the principal. You'll want to keep track of the the purchase prices of the houses that sell around you. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.

The Proof is in the Appraisal

When you determine you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Call the mortgage lender to request cancellation of your Private Mortgage Insurance. Your lender will ask for documentation that your equity is high enough. 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.

First Community Bank of Central Al. can help find out if you can eliminate your PMI. Call us at (334) 285-8850.

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