Make Private Mortgage Insurance a Thing of the Past

For loans made since July 1999, lending institutions are required (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 at the point the borrower earns 22 percent equity. (This legal obligation does not cover certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed after July '99), regardless of the original purchase price, once your equity reaches twenty percent.

Do your homework

Keep a running total of money going toward the principal. You'll want to stay aware of the prices of the homes that are selling in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.

Verify Equity Amount

At the point you think you have reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to contact your lending institution to alert them that you wish to cancel PMI payments. Next, you will be asked to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.

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

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