Eliminating Private Mortgage Insurance
Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of that year) goes down below seventy-eight percent of the purchase price, but not when the borrower's equity gets to twenty-two percent or more. (The legal obligation does not include a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan closing after July '99), regardless of the original purchase price, at the point your equity reaches twenty percent.
Verify the numbers
Study your statements often. Make yourself aware of the selling prices of other houses in your neighborhood. If your mortgage is under five years old, it's likely you haven't greatly reduced principal � you have been paying mostly interest.
Verify Equity Amount
At the point your equity has risen to the required twenty percent, you are not far away from stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI. Lenders ask for proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lenders request 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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