Canceling Private Mortgage Insurance
Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of that year) goes beneath seventy-eight percent of the purchase price, but not when the loan's equity gets to higher than twenty-two percent. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for your mortgage that closed after July '99), regardless of the original price of purchase, at the point the equity reaches twenty percent.
Verify the numbers
Keep track of your principal payments. Make yourself aware of the prices of other homes in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.
Proof of Equity
You can start the process of PMI cancelation when you you think that your equity has risen to 20%. You will need to contact your mortgage lender to let them know that you want to cancel PMI payments. Lending institutions require proof of eligibility at this point. You can get proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
America's Money Source can answer questions about PMI and many others. Give us a call: (407) 898-7559.
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