Eliminating Private Mortgage Insurance
Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to over twenty-two percent. (Some "higher risk" loans are not included.) However, if your equity reaches 20% (no matter what the original price was), you have the legal right to cancel the PMI (for a mortgage that after July 1999).
Do your homework
Review your monthly statements often. Make yourself aware of the selling prices of other houses in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you likely haven't been able to pay a lot of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
At the point your equity has risen to the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. Contact the mortgage lender to request cancellation of your PMI. Lending institutions require proof of eligibility at this point. Most lenders ask for 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.
Alternative Mortgage Group can answer questions about PMI and many others. Call us at 561-395-4264.