Make Private Mortgage Insurance a Thing of the Past
For loans closed since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of your purchase price � but not at the point the borrower earns 22 percent equity. (There are some exceptions -like some "high risk' loans.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the legal right to cancel the PMI (for a mortgage closed after July 1999).
Do your homework
Familiarize yourself with your loan statements to keep track of principal payments. Make yourself aware of the selling prices of other homes in your neighborhood. If your loan is under five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Proof of Equity
You can begin the process of canceling PMI as soon as you're sure your equity has risen to 20%. First you will let your lending institution know that you are requesting to cancel your PMI. The lending institution will request proof that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
Executive Lending Group, LLC can answer questions about PMI and many others. Give us a call: (816) 525-8000.
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