Canceling Private Mortgage Insurance
Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed after July of '99) goes under seventy-eight percent of the purchase price, but not at the time the loan's equity gets to higher than twenty-two percent. (A number of "higher risk" loan programs are excluded.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan closing past July '99), no matter the original price of purchase, at the point your equity reaches twenty percent.
Keep track of payments
Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to keep track of the the purchase prices of the houses that are selling in your neighborhood. If your loan is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.
The Proof is in the Appraisal
At the point you think you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you wish to cancel PMI payments. Then you will be required to verify that you are eligible to cancel. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your 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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