Canceling Private Mortgage Insurance
Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches more than twenty-two percent. (The law does not include certain higher risk mortgages.) But you have the right to cancel PMI yourself (for loans closed past July 1999) when your equity reaches 20 percent, no matter the original purchase price.
Keep a running total of payments
Keep a running total of money going toward the principal. Find out the purchase prices of other homes in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.
The Proof is in the Appraisal
You can start the process of canceling your PMI when you calculate that your equity has risen to 20%. You will need to call the mortgage lender to alert them that you want to cancel PMI payments. Your lender will ask for documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders 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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