Make Private Mortgage Insurance a Thing of the Past
For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of the purchase price � but not when the borrower earns 22 percent equity. (This legal requirment does not include some higher risk mortgages.) However, if your equity rises to 20% (no matter what the original price was), you can cancel PMI (for a loan that after July 1999).
Verify the numbers
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to keep track of the prices of the houses that are selling 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.
Proof of Equity
At the point your equity has risen to the required twenty percent, you are close to stopping your PMI payments, once and for all. You will need to contact your mortgage lender to let them know that you want to cancel PMI payments. Your lender will require documentation that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
Crown Mortgage can help find out if you can eliminate your PMI. Give us a call at (434) 975-5626.
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