Make Private Mortgage Insurance a Thing of the Past
For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of the purchase amount � but not when the borrower earns 22 percent equity. (There are some loans that are excluded -like some "high risk' loans.) However, you are able to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.
Keep track of payments
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also keep track of how much other homes are being sold for in your neighborhood. Unfortunately, if you have a new loan - five years or fewer, you likely haven't been able to pay a lot of the principal: you have been paying mostly interest.
Proof of Equity
Once your equity has reached the magic number of twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. You will first tell your lender that you are asking to cancel PMI. Lending institutions require paperwork verifying your eligibility at this point. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
America's Money Source can answer questions about PMI and many others. Call us at 4078987559.