Eliminating Private Mortgage Insurance
For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (no matter what the original price was), you have the right to cancel PMI (for a mortgage that past July 1999).
Do your homework
Analyze your monthly statements often. Make yourself aware of the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't started to pay very much of the principal: you are paying mostly interest.
The Proof is in the Appraisal
When you find you've reached 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. You will need to call the lending institution to alert them that you want to cancel PMI payments. The lending institution will require proof that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Valley Savers Mortgage, LLC can help find out if you can eliminate your PMI. Call us at (602) 332-9544.
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