Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of your purchase price � but not when the loan reaches 22 percent equity. (Some "higher risk" loan programs are excluded.) However, you are able to cancel PMI yourself (for mortgage loans closed after July 1999) once your equity reaches 20 percent, no matter the original purchase price.

Keep a record of payments

Review your statements often. Also stay aware of what other homes are purchased for in your neighborhood. Unfortunately, if yours is 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.

The Proof is in the Appraisal

At the point you determine you have reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will first tell your lender that you are requesting to cancel PMI. Your lender will request proof that your equity is at 20 percent or above. Usually 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.

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

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