While lending institutions have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips under 78% of the purchase price, they do not have to take similar action if the borrower's equity is over 22%. (There are some loans that are excluded -like some loans considered 'high risk'.) But you are able to cancel PMI yourself (for mortgages made past July 1999) at the point your equity gets to 20 percent, without consideration of the original purchase price.
Keep a running total of payments
Keep a running total of each principal payment. Pay attention to the selling prices of other houses in your immediate area. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.
The Proof is in the Appraisal
Once you determine you have reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will first notify your lender that you are asking to cancel PMI. Then you will be asked to submit documentation that you are eligible to cancel. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
Prime Capital Mortgage Corp can answer questions about PMI and many others. Give us a call: 248-644-1200.
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