Make Private Mortgage Insurance a Thing of the Past

For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" mortgage loans are not included.) However, if your equity reaches 20% (regardless of the original purchase price), you are able to cancel the PMI (for a mortgage loan closed past July 1999).

Do your homework

Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to be aware of the prices of the homes that are selling in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't paid down much principal � you have been paying mostly interest.

The Proof is in the Appraisal

At the point you think you've reached 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. Contact the lending institution to ask for cancellation of PMI. Then you will be asked to submit proof 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), which is required by most lenders before canceling PMI.

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

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