Goodbye, PMI!

While lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets under 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is over 22%. (A number of "higher risk" mortgage loans are not included.) But you have the right to cancel PMI yourself (for loans made past July 1999) once your equity rises to 20 percent, no matter the original purchase price.

Verify the numbers

Familiarize yourself with your monthly statements to keep a running total of principal payments. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't been able to pay very much of the principal: you are paying mostly interest.

Verify Eligibility

You can begin the process of PMI cancelation when you're sure your equity has reached 20%. First you will let your lending institution know that you are requesting to cancel your PMI. Lending institutions require proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

At AmeriBest Mortgage, we answer questions about PMI every day. Call us: (321) 777-7277.

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