Make Private Mortgage Insurance a Thing of the Past
Although lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the equity is above 22%. (This law does not include certain higher risk mortgages.) But if your equity reaches 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage closed after July 1999).
Keep a record of payments
Review your loan statements often. You'll want to stay aware of the the purchase prices of the houses that are selling around you. Unfortunately, if yours is a recent loan - five years or under, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.
Once your equity has risen to the magic number of twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. Call the mortgage lender to ask for cancellation of PMI. The lending institution will require documentation that your equity is high enough. You can acquire documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
At America's Money Source, we answer questions about PMI every day. Call us at (407) 898-7559.
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