Make Private Mortgage Insurance a Thing of the Past
Although lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is over 22%. (There are exceptions -like some loans considered 'high risk'.) But if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a loan closed past July 1999).
Keep a record of payments
Familiarize yourself with your loan statements to keep track of principal payments. Also keep track of what other homes are selling for in your neighborhood. Unfortunately, if you have a new loan - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.
Proof of Equity
At the point your equity has risen to the desired twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel.
At Coastal Mortgage Corp., we answer questions about PMI every day. Give us a call: 504-866-5626.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.