Eliminating Private Mortgage Insurance

For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase price � but not when the loan reaches 22 percent equity. (This legal obligation does not include some higher risk mortgages.) However, if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage closed after July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to stay aware of the prices of the houses that sell around you. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.

Verify Eligibility

When you think you've achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. Contact your lending institution to request cancellation of PMI. Next, you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they'll cancel PMI.

First Community Bank of Central Al. can help find out if you can eliminate your PMI. Call us: (334) 285-8850.

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