Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to twenty-two percent or more. (There are some loans that are not included -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original purchase price), you can cancel your PMI (for a loan closed past July 1999).
Do your homework
Keep a running total of each principal payment. Also stay aware of the price that other homes are selling for in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
Verify Equity Amount
Once your equity has risen to the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. First you will tell your lender that you are requesting to cancel your PMI. Then you will be asked to submit documentation that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and your lender will probably require one before they agree to cancel.
At Prime Capital Mortgage Corp, we answer questions about PMI every day. Give us a call: 248-644-1200.
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