Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of the purchase amount � but not at the point the borrower achieves 22 percent equity. (There are exceptions -like certain "high risk' loans.) However, if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel your PMI (for a mortgage closed after July 1999).

Do your homework

Keep track of your principal payments. Also be aware of what other homes are selling for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't had a chance to pay much of the principal: you are paying mostly interest.

Proof of Equity

At the point your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. Call the mortgage lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions require proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Abbey Mortgage, we answer questions about PMI every day. Give us a call: 352-369-4200.

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