Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of the purchase price � but not at the point the borrower achieves 22 percent equity. (Certain "higher risk" loan programs are not included.) But you are able to cancel PMI yourself (for mortgages closed after July 1999) when your equity gets to 20 percent, no matter the original price of purchase.

Verify the numbers

Keep a running total of each principal payment. You'll want to stay aware of the prices of the houses that sell around you. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you probably haven't started to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

At the point your equity has reached the required twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. You will first notify your lender that you are requesting to cancel your PMI. Next, you will be asked to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

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.