For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of your purchase amount � but not when the borrower achieves 22 percent equity. (This legal obligation does not apply to a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage closing past July '99), no matter the original price of purchase, at the point your equity rises to twenty percent.
Verify the numbers
Study your mortgage statements often. You'll want to be aware of the prices of the houses that are selling around you. Unfortunately, if you have a new loan - five years or fewer, you probably haven't started to pay very much of the principal: you have been paying mostly interest.
Verify Equity Amount
As soon as your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. First you will let your lender know that you are asking to cancel PMI. Your lender will require documentation that your equity is at 20 percent or above. Most 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.
Financial Edge Mortgage Corp. can answer questions about PMI and many others. Call us: 425-508-9988.
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