Make Private Mortgage Insurance a Thing of the Past
Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to more than twenty-two percent. (This law does not apply to some higher risk mortgages.) But if your equity rises to 20% (regardless of the original price of purchase), you are able to cancel your PMI (for a loan closed past July 1999).
Do your homework
Keep track of money going toward the principal. Make yourself aware of the selling prices of other homes in your immediate area. If your mortgage is under five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.
Proof of Equity
As soon as your equity has risen to the desired twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. You will first let your lender know that you are asking to cancel your PMI. Then you will be required to verify that you have at least 20 percent equity. You can acquire documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
At Coastal Mortgage Corp., we answer questions about PMI every day. Give us a call at 504-866-5626.
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