Make Private Mortgage Insurance a Thing of the Past
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While lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (Some "higher risk" loans are not included.) The good news is that you can request cancellation of your PMI yourself (for a mortgage that closed past July '99), no matter the original price of purchase, at the point your equity climbs to twenty percent.
Verify the numbers
Keep a running total of money going toward the principal. Also keep track of the price that other homes are purchased for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't been able to pay a lot of the principal: you have been paying mostly interest.
As soon as your equity has reached the desired twenty percent, you are not far away from canceling your PMI payments, once and for all. You will need to call your lending institution to let them know that you wish to cancel PMI. Lending institutions ask for documentation verifying your eligibility at this point. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
At Residential Mortgage Center, Inc., we answer questions about PMI every day. Call us: (240) 428-1650.