Eliminating Private Mortgage Insurance

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of '99) goes under seventy-eight percent of the price of purchase, but not at the point the loan's equity gets to more than twenty-two percent. (This legal requirment does not include some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage that closed past July '99), without considering the original price of purchase, at the point your equity gets to twenty percent.

Verify the numbers

Familiarize yourself with your loan statements to keep your eye on principal payments. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't had a chance to pay much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

When you determine you've achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. Contact the lending institution to request cancellation of PMI. The lending institution will ask for proof that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

1st Credential Mortgage Inc can answer questions about PMI and many others. Call us: (281) 778-0805.

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