Goodbye, PMI!

For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" mortgage loans are excluded.) But you can actually cancel PMI yourself (for mortgages made after July 1999) once your equity reaches 20 percent, without consideration of the original price of purchase.

Verify the numbers

Keep a running total of your principal payments. You'll want to stay aware of the the purchase amounts of the houses that sell in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or under, you probably haven't begun to pay very much of the principal: you are paying mostly interest.

Proof of Equity

Once you determine you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. Contact the mortgage lender to ask for cancellation of your PMI. The lending institution will require documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Financial Edge Mortgage Corp. can answer questions about PMI and many others. Give us a call: 425-508-9988.