Goodbye, PMI!

For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of your purchase price � but not when the borrower achieves 22 percent equity. (This legal requirment does not cover certain higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans made after July 1999) once your equity rises to 20 percent, without consideration of the original purchase price.

Verify the numbers

Keep track of your principal payments. Make yourself aware of the purchase prices of other houses in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.

Verify Eligibility

At the point you determine you've reached 20 percent equity, you can start the process of getting PMI out of your budget. You will need to contact your lender to let them know that you want to cancel PMI. Lenders request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and most lenders request one before they'll cancel PMI.

Iltis Lending Group can answer questions about PMI and many others. Call us at (941) 954-4252.