Goodbye, PMI!

Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (This legal obligation does not cover some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage that closed after July '99), no matter the original price of purchase, once the equity climbs to twenty percent.

Verify the numbers

Study your statements often. Also keep track of what other homes are purchased for in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

At the point you think you've reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Call the lender to ask for cancellation of your Private Mortgage Insurance. Your lender will request proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lenders request one before they'll cancel PMI.

Avalon Mortgage Services, Inc. can help find out if you can eliminate your PMI. Give us a call: (708) 403-5181.

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