Goodbye, PMI!

For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of the purchase price � but not at the point the borrower achieves 22 percent equity. (A number of "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for a mortgage loan that closed after July '99), no matter the original price of purchase, at the point your equity gets to twenty percent.

Do your homework

Keep track of money going toward the principal. Also stay aware of the price that other homes are being sold for in your neighborhood. Unfortunately, if you have a recent mortgage - five years or under, you probably haven't started to pay a lot of the principal: you are paying mostly interest.

Proof of Equity

Once you find you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. Contact your lending institution to request cancellation of your Private Mortgage Insurance. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel PMI.

At One Source Lending 303-220-7500, we answer questions about PMI every day. Call us at 303-220-7500.