Eliminating Private Mortgage Insurance
Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed after July of '99) goes under seventy-eight percent of the purchase price, but not when the loan's equity climbs to twenty-two percent or more. (This legal requirment does not include a number of higher risk mortgages.) But if your equity gets to 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a mortgage loan closed after July 1999).
Verify the numbers
Familiarize yourself with your loan statements to keep track of principal payments. Also be aware of how much other homes are purchased for in your neighborhood. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
Verify Equity Amount
At the point your equity has reached the required twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. You will need to contact the lender to alert them that you want to cancel PMI payments. The lending institution will ask for proof that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
Alternative Mortgage Group can help find out if you can eliminate your PMI. Call us: 561-395-4264.