Make Private Mortgage Insurance a Thing of the Past
For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" mortgage loans are excluded.) However, you can actually cancel PMI yourself (for mortgage loans made past July 1999) at the point your equity reaches 20 percent, regardless of the original price of purchase.
Do your homework
Familiarize yourself with your loan statements to keep a running total of principal payments. You'll want to keep track of the prices of the houses that are selling around you. Unfortunately, if yours is a recent loan - five years or under, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
You can start the process of PMI cancelation as soon as you're sure your equity has risen to 20%. You will first tell your lender that you are asking to cancel PMI. Lending institutions request paperwork verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
At Valley Savers Mortgage, LLC, we answer questions about PMI every day. Give us a call at (602) 332-9544.
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