Make Private Mortgage Insurance a Thing of the Past
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Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of that year) goes beneath seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or more. (Certain "higher risk" loans are not included.) The good news is that you can cancel your PMI yourself (for a mortgage loan that closed after July '99), without considering the original purchase price, after your equity rises to twenty percent.
Verify the numbers
Familiarize yourself with your monthly statements to keep your eye on principal payments. Make yourself aware of the prices of other houses in your immediate area. 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
When you think you have reached 20 percent equity, you can start the process of getting PMI out of your budget. You will first notify your lender that you are asking to cancel your PMI. Your lender will ask for proof that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
At PrimeMax Mortgage Group, we answer questions about PMI every day. Call us: (256) 543-9211.