Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made past July of that year) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or more. (There are exceptions -like a number of "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you can cancel the PMI (for a loan that past July 1999).

Verify the numbers

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also stay aware of what other homes are selling for in your neighborhood. Unfortunately, if yours is a new mortgage - five years or fewer, you probably haven't started to pay much of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of canceling your PMI at the time you're sure your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lenders ask for proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they agree to cancel.

F&T Mortgage, Inc. NMLS # 168839 ( can answer questions about PMI and many others. Give us a call: 214-300-8756.

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