Eliminating Private Mortgage Insurance
While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance goes under 78% of the price of purchase, they do not have to take similar action if the equity is over 22%. (There are exceptions -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for loans made after July 1999) when your equity rises to 20 percent, no matter the original purchase price.
Verify the numbers
Analyze your statements often. You'll want to keep track of the the purchase prices of the homes that sell around you. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't gone down much.
Verify Equity Amount
When you think you've reached 20 percent equity, you can start the process of getting PMI out of your budget. You will need to contact the lending institution to alert them that you want to cancel PMI. Your lender will require proof that your equity is high enough. You can acquire proof of your equity by getting a state certified appraisal on 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. Give us a call at 504-866-5626.
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