Make Private Mortgage Insurance a Thing of the Past
Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed after July of '99) goes under seventy-eight percent of the purchase price, but not at the point the loan's equity gets to more than twenty-two percent. (The law does not apply to a number of higher risk mortgages.) But if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage closed after July 1999).
Verify the numbers
Keep a running total of your principal payments. You'll want to be aware of the prices of the houses that sell around you. Unfortunately, if you have a new loan - five years or under, you likely haven't begun to pay a lot of the principal: you have been paying mostly interest.
You can start the process of canceling your PMI as soon as you you think that your equity has risen to 20%. Contact your mortgage lender to request cancellation of your 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 verify your home's equity and eligibility for PMI cancellation.
At Coastal Mortgage Corp., we answer questions about PMI every day. Call us: 504-866-5626.
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