Goodbye, PMI!

While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance dips under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is more than 22%. (Some "higher risk" loan programs are not included.) The good news is that you can cancel your PMI yourself (for a mortgage closing after July '99), without considering the original price of purchase, once your equity reaches twenty percent.

Keep track of payments

Review your statements often. Also stay aware of how much other homes are selling for in your neighborhood. Unfortunately, if you have a new loan - five years or under, you probably haven't started to pay a lot of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of PMI cancelation at the time you're sure your equity has reached 20%. You will need to call the lending institution to let them know that you wish to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions request one before they agree to cancel PMI.

At 1st Credential Mortgage Inc, we answer questions about PMI every day. Give us a call at (281) 778-0805.

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