Make Private Mortgage Insurance a Thing of the Past
Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity gets to twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a loan that closed past July '99), regardless of the original purchase price, once the equity climbs to twenty percent.
Do your homework
Keep a running total of money going toward the principal. Also keep track of the price that other homes are selling for in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
The Proof is in the Appraisal
As soon as your equity has reached the desired twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. Contact your mortgage lender to ask for cancellation of your PMI. Lenders ask for paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably require one before they agree to cancel PMI.
At Financial Edge Mortgage Corp., we answer questions about PMI every day. Give us a call at 425-508-9988.
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