Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the right to cancel the PMI (for a mortgage loan closed after July 1999).

Keep a record of payments

Review your mortgage statements often. Make yourself aware of the prices of other homes in your immediate area. If your mortgage is under five years old, probably you haven't made much progress with the principal � it's been mostly interest.

The Proof is in the Appraisal

You can begin the process of PMI cancelation as soon as you're sure your equity has risen to 20%. First you will tell your lender that you are requesting to cancel PMI. The lending institution will require documentation that your equity is high enough. You can get documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about PMI every day. Give us a call at 214-300-8756.



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