Canceling Private Mortgage Insurance
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Although lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (Certain "higher risk" mortgage loans are excluded.) However, you can actually cancel PMI yourself (for mortgages closed past July 1999) once your equity rises to 20 percent, regardless of the original purchase price.
Do your homework
Study your monthly statements often. Find out the selling prices of other houses in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
Proof of Equity
At the point your equity has risen to the magic number of twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. First you will let your lender know that you are requesting to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. 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 PMI cancellation.
At Mortgage Max Inc, we answer questions about PMI every day. Call us: (760) 547-2080.