Make Private Mortgage Insurance a Thing of the Past
For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (This legal obligation does not include certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage closing after July '99), regardless of the original purchase price, when the equity rises to twenty percent.
Keep a record of payments
Keep a running total of your principal payments. You'll want to stay aware of the prices of the houses that sell in your neighborhood. If your loan is under five years old, probably you haven't paid down much principal � you have paid mostly interest.
The Proof is in the Appraisal
Once you determine you have achieved at least 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. You will first notify your lender that you are requesting to cancel PMI. 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 canceling PMI.
At Alternative Mortgage Group, we answer questions about PMI every day. Give us a call: 561-395-4264.