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 after July of '99) goes under seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to over twenty-two percent. (A number of "higher risk" loan programs are excluded.) But you can actually cancel PMI yourself (for mortgages closed past July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.
Do your homework
Study your statements often. Also be aware of what other homes are being sold for in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
You can begin the process of canceling PMI when you're sure your equity reaches 20%. You will need to contact your lender to let them know that you wish to cancel PMI. Then you will be required to submit proof that you have at least 20 percent equity. You can get documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
Executive Lending Group, LLC can help find out if you can eliminate your PMI. Give us a call: (816) 525-8000.
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