Make Private Mortgage Insurance a Thing of the Past
While lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the equity is above 22%. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (no matter what the original price was), you have the right to cancel the PMI (for a mortgage loan closed after July 1999).
Keep a running total of payments
Analyze your mortgage statements often. You'll want to keep track of the the purchase amounts of the homes that are selling in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
Proof of Equity
You can start the process of canceling PMI as soon as you determine your equity has risen to 20%. First you will let your lending institution know that you are asking to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
At Executive Lending Group, LLC, we answer questions about PMI every day. Call us: (816) 525-8000 & (81.
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