Make Private Mortgage Insurance a Thing of the Past
For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase amount � but not when the borrower achieves 22 percent equity. (The legal obligation does not apply to a number of higher risk mortgages.) But if your equity gets to 20% (no matter what the original purchase price was), you are able to cancel PMI (for a loan closed past July 1999).
Keep a running total of payments
Keep a running total of money going toward the principal. Also stay aware of how much other homes are selling for in your neighborhood. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
Proof of Equity
Once you find you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will need to call the mortgage lender to let them know that you wish to cancel PMI payments. Your lender will require proof that your equity is high enough. You can acquire proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
Coastal Mortgage Corp. can help find out if you can eliminate your PMI. Call us at 504-866-5626.
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