Canceling Private Mortgage Insurance

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of '99) goes below seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to higher than twenty-two percent. (This legal obligation does not include some higher risk mortgages.) But if your equity reaches 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a mortgage loan closed after July 1999).

Keep track of payments

Keep track of your principal payments. Find out the selling prices of other houses in your neighborhood. Unfortunately, if you have a recent loan - five years or under, you likely haven't begun to pay a lot of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

At the point you think you've achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. Call your lending institution to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel.

1st Credential Mortgage Inc can help find out if you can eliminate your PMI. Call us at (281) 778-0805.

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