Canceling Private Mortgage Insurance

For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (A number of "higher risk" loans are not included.) The good news is that you can request cancelation of your PMI yourself (for your mortgage that closed after July '99), no matter the original price of purchase, at the point your equity rises to twenty percent.

Do your homework

Familiarize yourself with your loan statements to keep track of principal payments. Find out the purchase prices of other homes in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � you have paid mostly interest.

Verify Equity Amount

You can begin the process of canceling PMI as soon as you're sure your equity reaches 20%. Contact the lending institution to request cancellation of PMI. Next, you will be asked to verify that you have at least 20 percent equity. You can get documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

At F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about PMI every day. Call us at 214-300-8756.