Goodbye, PMI!

Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance gets under 78% of the purchase price, they do not have to take similar action if the borrower's equity is above 22%. (The law does not apply to certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a loan closing after July '99), no matter the original purchase price, after the equity rises to twenty percent.

Verify the numbers

Analyze your monthly statements often. Pay attention to the prices of other homes in your immediate area. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't been able to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

Once you find you've reached 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. Contact your mortgage lender to ask for cancellation of your PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lending institutions will require one before they agree to cancel PMI.

F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can answer questions about PMI and many others. Call us at 214-300-8756.



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