Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made after July of '99) goes down below seventy-eight percent of the purchase price, but not when the borrower's equity reaches more than twenty-two percent. (There are some loans that are not covered by this law -like a number of "high risk' loans.) But if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel the PMI (for a loan closed after July 1999).

Verify the numbers

Review your monthly statements often. You'll want to keep track of the the purchase prices of the homes that are selling in your neighborhood. If your loan is fewer than five years old, it's likely you haven't made much progress with the principal � you have been paying mostly interest.

The Proof is in the Appraisal

As soon as your equity has reached the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. You will first tell your lender that you are asking to cancel PMI. Your lender will ask for proof that your equity is high enough. Most 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 PMI cancellation.

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

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