Canceling Private Mortgage Insurance

For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of the purchase amount � but not when the borrower achieves 22 percent equity. (The legal obligation does not apply to certain higher risk mortgages.) But if your equity gets to 20% (regardless of the original purchase price), you are able to cancel the PMI (for a loan that after July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep your eye on principal payments. Pay attention to the selling prices of other homes in your neighborhood. If your mortgage is under five years old, chances are you haven't paid down much principal � you have been paying mostly interest.

Proof of Equity

Once your equity has reached the magic number of twenty percent, you are not far away from getting rid of your PMI payments, once and for all. Contact your lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and almost all lending institutions request one before they'll cancel PMI.

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

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