Eliminating Private Mortgage Insurance

Although lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips under 78% of the price of purchase, they do not have to cancel PMI automatically if the equity is over 22%. (A number of "higher risk" mortgage loans are not included.) But if your equity gets to 20% (regardless of the original price of purchase), you have the legal right to cancel the PMI (for a mortgage loan closed past July 1999).

Verify the numbers

Keep a running total of each principal payment. Also keep track of how much other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or under, you probably haven't been able to pay a lot of the principal: you have been paying mostly interest.

The Proof is in the Appraisal

You can begin the process of canceling PMI as soon as you determine your equity reaches 20%. You will need to contact the lender to let them know that you want to cancel PMI payments. Your lender will ask for documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they'll cancel PMI.

Coastal Mortgage Corp. can help find out if you can eliminate your PMI. Give us a call: 504-866-5626.

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