Goodbye, PMI!

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (This law does not cover some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed after July '99), no matter the original price of purchase, at the point your equity gets to twenty percent.

Do your homework

Keep a running total of each principal payment. Find out the prices of other houses in your neighborhood. If your loan is under five years old, chances are you haven't paid down much principal � it's been mostly interest.

The Proof is in the Appraisal

You can begin the process of canceling your PMI at the time you you think that your equity has risen to 20%. Call your lending institution to request cancellation of your PMI. Next, you will be asked to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and almost all lenders will require one before they agree to cancel.

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

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