Eliminating Private Mortgage Insurance

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (no matter what the original price was), you are able to cancel PMI (for a mortgage loan that past July 1999).

Do your homework

Keep track of each principal payment. You'll want to stay aware of the prices of the homes that sell around you. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't started to pay very much of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

Once your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Lenders require proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and almost all lenders request one before they'll cancel PMI.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Call us: (281) 778-0805.

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