Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of the purchase amount � but not when the borrower earns 22 percent equity. (There are exceptions -like a number of "high risk' loans.) But if your equity reaches 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a mortgage closed after July 1999).

Do your homework

Keep a running total of each principal payment. You'll want to keep track of the the purchase amounts of the houses that sell around you. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't been able to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

At the point your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI. Lending institutions request 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 determine your home's equity and eligibility for PMI cancellation.

Foxfield Financial can help find out if you can eliminate your PMI. Call us: 720-598-8300.

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