While lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the equity is over 22%. (There are some exceptions -like some loans considered 'high risk'.) But if your equity rises to 20% (regardless of the original purchase price), you have the legal right to cancel your PMI (for a mortgage closed after July 1999).
Verify the numbers
Study your statements often. Also be aware of what other homes are selling for in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
At the point you think you've reached 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will first let your lender know that you are asking to cancel PMI. Lenders ask for proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably require one before they agree to cancel.
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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