Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity gets to twenty-two percent or higher. (Some "higher risk" mortgage loans are not included.) But if your equity gets to 20% (regardless of the original purchase price), you have the right to cancel the PMI (for a loan closed past July 1999).
Verify the numbers
Familiarize yourself with your monthly statements to keep track of principal payments. Also stay aware of the price that other homes are purchased for in your neighborhood. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.
Verify Equity Amount
When you determine you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Call your lender to request cancellation of your Private Mortgage Insurance. Lenders request proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
America's Money Source can answer questions about PMI and many others. Call us at (407) 898-7559.
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