Goodbye, PMI!

For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of the purchase amount � but not when the borrower earns 22 percent equity. (The law does not cover some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed past July '99), no matter the original purchase price, when the equity reaches twenty percent.

Do your homework

Keep track of your principal payments. Also keep track of the price that other homes are selling for in your neighborhood. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

As soon as your equity has reached the magic number of twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. You will need to call the lender to alert them that you want to cancel PMI. Next, 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 most lenders request one before they agree to cancel.

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

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