Make Private Mortgage Insurance a Thing of the Past
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For loans made 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 amount - but not at the point the borrower earns 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (no matter what the original purchase price was), you have the legal right to
cancel the PMI (for a loan closed after July 1999).
Verify the numbers
Familiarize yourself with your loan statements to keep your eye on principal payments. Find out the prices of other homes in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
The Proof is in the Appraisal
At the point your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. First you will let your lending institution know that you are asking to cancel your PMI. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is - and your lender will probably require one before they agree to cancel PMI.
Funding Resources Mortgage Corp can help find out if you can eliminate your PMI. Call us: 888-376-3762.