Make Private Mortgage Insurance a Thing of the Past
Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made after July of '99) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity reaches over twenty-two percent. (Certain "higher risk" mortgage loans are not included.) However, if your equity reaches 20% (no matter what the original price was), you can cancel the PMI (for a loan closed past July 1999).
Do your homework
Analyze your monthly statements often. You'll want to be aware of the the purchase prices of the homes that are selling in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
The Proof is in the Appraisal
You can start the process of PMI cancelation as soon as you determine your equity reaches 20%. First you will notify your lender that you are asking to cancel your PMI. Next, you will be asked to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions will require one before they agree to cancel PMI.
At America's Money Source, we answer questions about PMI every day. Call us: (407) 898-7559.
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