Goodbye, PMI!

For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (The legal obligation does not include a number of higher risk mortgages.) But you are able to cancel PMI yourself (for mortgages closed past July 1999) at the point your equity reaches 20 percent, no matter the original purchase price.

Verify the numbers

Keep a running total of money going toward the principal. Also keep track of what other homes are selling for in your neighborhood. If your mortgage is under five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.

Verify Equity Amount

Once you determine you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. First you will let your lending institution know that you are requesting to cancel PMI. Lending institutions request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

At Coleman Mortgage Company, we answer questions about PMI every day. Call us at 972-932-9083.

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