Goodbye, PMI!

For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (This law does not include a number of higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans made past July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.

Keep a running total of payments

Review your loan statements often. You'll want to stay aware of the the purchase prices of the homes that sell in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't lowered much.

Proof of Equity

At the point your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first let your lending institution know that you are requesting to cancel PMI. Lenders request proof of eligibility at this point. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At Amity Mortgage LLC, we answer questions about PMI every day. Give us a call: (203) 729-6681.

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