Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the balance gets below 78% of the purchase price, they do not have to cancel automatically if the equity is over 22%. (This legal obligation does not apply to some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing past July '99), regardless of the original price of purchase, at the point your equity rises to twenty percent.
Verify the numbers
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to stay aware of the the purchase prices of the houses that are selling around you. If your loan is under five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.
The Proof is in the Appraisal
You can begin the process of canceling PMI as soon as you're sure your equity has reached 20%. Call your lending institution to request cancellation of your PMI. Then you will be asked to submit proof that you have at least 20 percent equity. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
Prime Capital Mortgage Corp can answer questions about PMI and many others. Call us: 248-644-1200.
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