Eliminating Private Mortgage Insurance

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (There are some loans that are excluded -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for your mortgage closing past July '99), without considering the original purchase price, at the point your equity rises to twenty percent.

Do your homework

Keep track of each principal payment. Make yourself aware of the purchase prices of other homes in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � it's been mostly interest.

Proof of Equity

You can begin the process of canceling PMI when you calculate that your equity has reached 20%. You will first notify your lender that you are requesting to cancel PMI. Next, you will be asked to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Give us a call: (281) 778-0805.

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