Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (There are exceptions -like a number of "high risk' loans.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a mortgage loan closed past July 1999).

Do your homework

Keep track of each principal payment. Also stay aware of what other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you probably haven't begun to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

When you determine you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will request documentation 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), which is required by most lending institutions before canceling PMI.

1st Credential Mortgage Inc can help find out if you can eliminate your PMI. Call us at (281) 778-0805.

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