Eliminating Private Mortgage Insurance

For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" loan programs are excluded.) The good news is that you can cancel your PMI yourself (for your mortgage closing after July '99), without considering the original price of purchase, when the equity climbs to twenty percent.

Do your homework

Keep a running total of your principal payments. You'll want to keep track of the prices of the homes that are selling around you. Unfortunately, if you have a recent mortgage - five years or under, you probably haven't had a chance to pay much of the principal: you have been paying mostly interest.

Verify Eligibility

Once your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. Contact your lending institution to request cancellation of your PMI. Next, you will be required to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lenders require one before they'll cancel PMI.

Atlantic Financial Services can answer questions about PMI and many others. Give us a call: (732) 969-9300.

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