Goodbye, PMI!

For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (The legal requirment does not cover some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), no matter the original purchase price, after your equity reaches twenty percent.

Do your homework

Analyze your statements often. You'll want to keep track of the the purchase prices of the houses that are selling around you. Unfortunately, if you have a recent loan - five years or fewer, you probably haven't been able to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

Once you think you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you wish to cancel PMI payments. Then you will be required to verify that you have at least 20 percent equity. You can acquire proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Amity Mortgage LLC can answer questions about PMI and many others. Give us a call at (203) 729-6681.

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