Eliminating Private Mortgage Insurance

For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase price � but not when the borrower earns 22 percent equity. (This legal obligation does not cover some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing past July '99), regardless of the original purchase price, once your equity rises to twenty percent.

Verify the numbers

Keep a running total of money going toward the principal. Pay attention to the purchase prices of other houses in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or fewer, you likely haven't started to pay very much of the principal: you have been paying mostly interest.

Verify Eligibility

You can begin the process of canceling PMI at the time you're sure your equity reaches 20%. First you will tell your lender that you are asking to cancel your PMI. Lenders require proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lenders request one before they agree to cancel PMI.

Foxfield Financial can answer questions about PMI and many others. Call us: 720-598-8300.

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