Canceling Private Mortgage Insurance

Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets under 78% of the price of purchase, they do not have to take similar action if the borrower's equity is over 22%. (There are exceptions -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), without considering the original purchase price, after the equity climbs to twenty percent.

Do your homework

Keep track of money going toward the principal. You'll want to keep track of the the purchase amounts of the homes that are selling in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't had a chance to pay much of the principal: you are paying mostly interest.

Proof of Equity

Once you find you have achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. First you will notify your lender that you are requesting to cancel your PMI. Your lender will request proof that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can help find out if you can eliminate your PMI. Give us a call at 214-300-8756.



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