Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of the purchase price � but not when the borrower earns 22 percent equity. (This law does not cover a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage loan closing past July '99), regardless of the original purchase price, after your equity rises to twenty percent.

Keep a record of payments

Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to keep track of the the purchase prices of the houses that are selling in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't lowered much.

Verify Equity Amount

Once your equity has risen to the required twenty percent, you are not far away from getting rid of your PMI payments, for the life of your loan. Call the lender to ask for cancellation of your PMI. The lending institution will ask for proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably require one before they'll cancel PMI.

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

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