Make Private Mortgage Insurance a Thing of the Past
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Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the point the borrower's equity reaches over twenty-two percent. (There are exceptions -like some loans considered 'high risk'.) But you are able to cancel PMI yourself (for loans made past July 1999) once your equity reaches 20 percent, no matter the original purchase price.
Keep track of payments
Familiarize yourself with your monthly statements to keep track of principal payments. Make yourself aware of the purchase prices of other homes in your immediate area. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
The Proof is in the Appraisal
Once your equity has risen to the magic number of twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will need to contact the lender to let them know that you want to cancel PMI payments. Lending institutions request proof of eligibility at this point. Usually 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 PMI cancellation.
The Mortgage Partner can answer questions about PMI and many others. Give us a call: (949) 249-3067.
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