Goodbye, PMI!

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Although lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips under 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (A number of "higher risk" loan programs are excluded.) The good news is that you can cancel your PMI yourself (for your loan that closed after July '99), without considering the original purchase price, at the point your equity climbs to twenty percent.

Keep a record of payments

Familiarize yourself with your monthly statements to keep track of principal payments. Also be aware of the price that other homes are purchased for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't started to pay a lot of the principal: you are paying mostly interest.

Verify Eligibility

As soon as your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, once and for all. First you will notify your lender that you are requesting to cancel PMI. Lenders ask for proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.

Cosatal Financial Group can answer questions about PMI and many others. Give us a call: (512) 292-3494.

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