Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of that year) goes beneath seventy-eight percent of the price of purchase, but not at the time the borrower's equity climbs to twenty-two percent or higher. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed after July '99), regardless of the original purchase price, at the point your equity rises to twenty percent.

Verify the numbers

Keep a running total of your principal payments. You'll want to be aware of the prices of the houses that are selling in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you likely haven't been able to pay much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

At the point you find you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. First you will let your lender know that you are asking to cancel PMI. Next, you will be asked to verify that you have at least 20 percent equity. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

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

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