Make Private Mortgage Insurance a Thing of the Past

Although lenders have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (Certain "higher risk" morgages are excluded.) But you have the right to cancel PMI yourself (for mortgages made after July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.

Keep track of payments

Familiarize yourself with your loan statements to keep a running total of principal payments. Also be aware of what other homes are purchased for in your neighborhood. Unfortunately, if you have a new loan - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.

Verify Equity Amount

At the point you find you've reached 20 percent equity, 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. The lending institution will require documentation that your equity is high enough. You can get documentation of your equity by getting a state certified appraisal on 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. Call us: (281) 778-0805.

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