Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity reaches twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) However, if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage that after July 1999).
Verify the numbers
Keep track of each principal payment. Make yourself aware of the purchase prices of other houses in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.
Proof of Equity
When you determine you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. You will need to call your mortgage lender to let them know that you want to cancel PMI payments. Next, you will be required to verify that you have at least 20 percent equity. Usually 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. Call us at (816) 525-8000.
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