Goodbye, PMI!

For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes under 78 percent of your purchase amount � but not when the borrower achieves 22 percent equity. (There are some exceptions -like certain "high risk' loans.) But if your equity gets to 20% (regardless of the original purchase price), you are able to cancel the PMI (for a mortgage that past July 1999).

Keep a running total of payments

Keep track of your principal payments. Also be aware of how much other homes are purchased for in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.

The Proof is in the Appraisal

At the point you think you've achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you wish to cancel PMI payments. The lending institution will require proof that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.

At Coastal Mortgage Corp., we answer questions about PMI every day. Call us: 504-866-5626.

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