Canceling Private Mortgage Insurance
Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity climbs to higher than twenty-two percent. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for your loan closing past July '99), no matter the original price of purchase, when the equity climbs to twenty percent.
Verify the numbers
Keep track of your principal payments. Also keep track of how much other homes are selling for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or fewer, you probably haven't begun to pay very much of the principal: you have been paying mostly interest.
Verify Equity Amount
You can begin the process of canceling your PMI as soon as you calculate that your equity reaches 20%. Contact your lending institution to ask for cancellation of PMI. Next, you will be asked to submit documentation that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
At Crown Mortgage, we answer questions about PMI every day. Give us a call: (434) 975-5626.
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