Eliminating Private Mortgage Insurance
Although lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is above 22%. (There are some exceptions -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage that closed after July '99), regardless of the original price of purchase, once your equity climbs to twenty percent.
Keep track of payments
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to be aware of the the purchase amounts of the houses that are selling in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal � it's been mostly interest.
Proof of Equity
Once your equity has risen to the desired twenty percent, you are not far away from stopping your PMI payments, once and for all. First you will let your lender know that you are asking to cancel PMI. Lending institutions require proof of eligibility at this point. You can acquire documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
Prime Capital Mortgage Corp can help find out if you can eliminate your PMI. Call us at 248-644-1200.
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