Eliminating Private Mortgage Insurance
Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity reaches higher than twenty-two percent. (There are some loans that are not included -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a mortgage that closed after July '99), regardless of the original purchase price, once your equity climbs to twenty percent.
Do your homework
Study your mortgage statements often. Pay attention to the purchase prices of other houses in your immediate area. If your loan is under five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.
Proof of Equity
Once you determine you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to contact your mortgage lender to alert them that you wish to cancel PMI payments. Then you will be required to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
America's Money Source can answer questions about PMI and many others. Call us: (407) 898-7559.
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