Make Private Mortgage Insurance a Thing of the Past

For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of the purchase price � but not when the borrower earns 22 percent equity. (Certain "higher risk" mortgage loans are excluded.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the legal right to cancel your PMI (for a loan that after July 1999).

Keep track of payments

Analyze your mortgage statements often. Also keep track of what other homes are purchased for 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 you find you have reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Contact the lender to ask for cancellation of PMI. Your lender will require documentation that your equity is high enough. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.

Valley Savers Mortgage, LLC can answer questions about PMI and many others. Give us a call: (602) 332-9544.

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