Make Private Mortgage Insurance a Thing of the Past
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Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of '99) goes below seventy-eight percent of the purchase price, but not when the borrower's equity gets to over twenty-two percent. (Certain "higher risk" loans are not included.) However, you are able to cancel PMI yourself (for mortgage loans closed past July 1999) when your equity rises to 20 percent, no matter the original price of purchase.
Do your homework
Familiarize yourself with your monthly statements to keep track of principal payments. You'll want to be aware of the prices of the houses that are selling around you. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
The Proof is in the Appraisal
Once your equity has reached the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions request paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Real Estate Loan 4 U can answer questions about PMI and many others. Call us: (408) 255-3978.