Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the point the loan's equity gets to twenty-two percent or higher. (This law does not include certain higher risk mortgages.) But if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel PMI (for a loan that past July 1999).
Do your homework
Familiarize yourself with your loan statements to keep track of principal payments. Pay attention to the prices of other houses in your neighborhood. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.
The Proof is in the Appraisal
Once you think you have achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. You will first let your lender know that you are requesting to cancel PMI. Lending institutions request paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably request one before they'll 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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