Eliminating Private Mortgage Insurance
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For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase amount - but not at the point the borrower achieves 22 percent equity. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for mortgages closed past July 1999) once your equity gets to 20 percent, no matter the original price of purchase.
Verify the numbers
Review your statements often. Also keep track of what other homes are purchased for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't been able to pay much of the principal: you are paying mostly interest.
Verify Equity Amount
Once your equity has risen to the required twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. You will first tell your lender that you are requesting to cancel your PMI. Lending institutions request paperwork verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
At PLN Associates, Inc, we answer questions about PMI every day. Give us a call at 425-452-5345.