Goodbye, PMI!

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity gets to over twenty-two percent. (The legal requirment does not include a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), without considering the original price of purchase, at the point the equity reaches twenty percent.

Verify the numbers

Analyze your mortgage statements often. You'll want to keep track of the the purchase amounts of the houses that are selling in your neighborhood. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.

The Proof is in the Appraisal

You can begin the process of PMI cancelation when you're sure your equity has risen to 20%. You will first let your lender know that you are requesting to cancel PMI. Lenders require proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Atlantic Financial Services, we answer questions about PMI every day. Call us: (732) 969-9300.

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