Make Private Mortgage Insurance a Thing of the Past
While lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is above 22%. (There are some exceptions -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing after July '99), without considering the original price of purchase, when your equity gets to twenty percent.
Verify the numbers
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to stay aware of the prices of the houses that sell in your neighborhood. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
The Proof is in the Appraisal
You can start the process of canceling your PMI when you you think that your equity reaches 20%. First you will let your lender know that you are asking to cancel your PMI. Next, you will be required to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
At Coastal Mortgage Corp., we answer questions about PMI every day. Give us a call: 504-866-5626.
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