Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of that year) goes beneath seventy-eight percent of the price of purchase, but not when the loan's equity gets to twenty-two percent or more. (There are exceptions -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for your mortgage closing past July '99), without considering the original purchase price, at the point the equity rises to twenty percent.
Do your homework
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to keep track of the the purchase amounts of the houses that sell around you. Unfortunately, if yours is a new loan - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.
Verify Equity Amount
Once your equity has reached the magic number of twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. You will need to contact your mortgage lender to let them know that you want to cancel PMI payments. Lenders require paperwork verifying your eligibility at this point. Usually lenders ask for 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.
Executive Lending Group, LLC can answer questions about PMI and many others. Call us: (816) 525-8000.
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