Canceling Private Mortgage Insurance
While lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (This legal obligation does not include a number of higher risk mortgages.) But you are able to cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity reaches 20 percent, without consideration of the original purchase price.
Do your homework
Familiarize yourself with your loan statements to keep your eye on principal payments. Also stay aware of how much other homes are purchased for in your neighborhood. If your mortgage is under five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.
At the point your equity has reached the required twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lenders ask for proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
Prime Capital Mortgage Corp can help find out if you can eliminate your PMI. Call us: 248-644-1200.
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