Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity climbs to over twenty-two percent. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing past July '99), without considering the original purchase price, once your equity reaches twenty percent.

Keep track of payments

Familiarize yourself with your monthly statements to keep your eye on principal payments. You'll want to be aware of the prices of the homes that are selling in your neighborhood. If your mortgage is under five years old, it's likely you haven't greatly reduced principal � you have paid mostly interest.

Proof of Equity

Once your equity has reached the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to call the lender to let them know that you wish to cancel PMI. Then you will be asked to verify that you have at least 20 percent equity. 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. Call us: (281) 778-0805.

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