Make Private Mortgage Insurance a Thing of the Past

Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips below 78% of the purchase price, they do not have to take similar action if the equity is more than 22%. (Some "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), no matter the original purchase price, once your equity reaches twenty percent.

Do your homework

Analyze your statements often. Also stay aware of what other homes are being sold for in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.

The Proof is in the Appraisal

At the point you think you've reached 20 percent equity, you can start the process of freeing yourself from PMI payments. Call the lending institution to request cancellation of PMI. Your lender will ask for documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they'll cancel PMI.

Channel Mortgage LLC can answer questions about PMI and many others. Give us a call: (718) 639-9500.

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