Canceling Private Mortgage Insurance
For loans made since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (There are some exceptions -like certain "high risk' loans.) However, if your equity gets to 20% (regardless of the original price of purchase), you are able to cancel your PMI (for a loan that after July 1999).
Do your homework
Keep track of money going toward the principal. Also stay aware of how much other homes are purchased for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
The Proof is in the Appraisal
Once your equity has risen to the required twenty percent, you are not far away from canceling your PMI payments, once and for all. Call your lending institution to request cancellation of PMI. Your lender will request proof that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
At Prime Capital Mortgage Corp, we answer questions about PMI every day. Give us a call at 248-644-1200.
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