Eliminating Private Mortgage Insurance
While lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance gets under 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (There are some exceptions -like certain "high risk' loans.) But if your equity gets to 20% (regardless of the original purchase price), you are able to cancel PMI (for a loan closed after July 1999).
Do your homework
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also keep track of what other homes are selling for in your neighborhood. If your loan is under five years old, chances are you haven't paid down much principal � it's been mostly interest.
Once you find you have achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. Call the mortgage lender to request cancellation of PMI. Lenders require proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
At Coastal Mortgage Corp., we answer questions about PMI every day. Call us: 504-866-5626.
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