Goodbye, PMI!

For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of the purchase amount � but not at the point the borrower achieves 22 percent equity. (A number of "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed after July '99), regardless of the original purchase price, once your equity rises to twenty percent.

Keep a running total of payments

Analyze your mortgage statements often. Make yourself aware of the purchase prices of other houses in your neighborhood. If your mortgage is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.

Verify Equity Amount

Once you find you have reached 20 percent equity, you can begin the process of getting PMI out of your budget. Call the lending institution to ask for cancellation of PMI. Lending institutions ask for proof of eligibility at this point. Usually 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 PMI cancellation.

Firelight Mortgage Consultants can help find out if you can eliminate your PMI. Give us a call at (303) 228-2254.

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