Eliminating Private Mortgage Insurance

Although lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the balance gets below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is over 22%. (There are exceptions -like certain "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgages made after July 1999) at the point your equity reaches 20 percent, without consideration of the original purchase price.

Do your homework

Familiarize yourself with your mortgage statements to keep track of principal payments. Also be aware of the price that other homes are being sold for in your neighborhood. If your mortgage 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

At the point you think you have reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be asked to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions require one before they agree to cancel.

Coastal Mortgage Corp. can help find out if you can eliminate your PMI. Call us at 504-866-5626.

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