Eliminating Private Mortgage Insurance
For loans made since 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 price � but not when the loan reaches 22 percent equity. (Certain "higher risk" loan programs are excluded.) But if your equity reaches 20% (regardless of the original price of purchase), you can cancel the PMI (for a mortgage loan that after July 1999).
Keep track of payments
Familiarize yourself with your monthly statements to keep track of principal payments. You'll want to keep track of the prices of the homes that sell in your neighborhood. Unfortunately, if you have a new mortgage - five years or fewer, you probably haven't started to pay a lot of the principal: you have been paying mostly interest.
Proof of Equity
You can begin the process of canceling PMI as soon as you're sure your equity has risen to 20%. Contact the lending institution to ask for cancellation of your PMI. Next, you will be asked to submit proof that you are eligible to cancel. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Coastal Mortgage Corp. can help find out if you can eliminate your PMI. Call us: 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.