Make Private Mortgage Insurance a Thing of the Past
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Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to more than twenty-two percent. (The legal requirement does not cover a number of higher risk mortgages.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the right to cancel the PMI (for a mortgage loan closed past July 1999).
Do your homework
Review your statements often. Pay attention to the purchase prices of other houses in your immediate area. If your loan is fewer than five years old, chances are you haven't made much progress with the principal - it's been mostly interest.
At the point your equity has reached the required twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. First you will let your lender know that you are requesting to cancel your PMI. Lending institutions require documentation verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
At Scott Fenner & The Mortgage Team, we answer questions about PMI every day. Call us at 602-647-2555.