Although lending institutions have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance dips under 78% of the price of purchase, they do not have to take similar action if the loan's equity is over 22%. (This law does not cover certain higher risk mortgages.) However, if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel PMI (for a mortgage that past July 1999).
Do your homework
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Find out the prices of other houses in your immediate area. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't been able to pay very much of the principal: you have been paying mostly interest.
Proof of Equity
Once your equity has risen to the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. Call the lender to ask for cancellation of your PMI. Next, you will be asked to verify that you are eligible to cancel. The best proof there is can be found in 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: 504-866-5626.
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