Make Private Mortgage Insurance a Thing of the Past
For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of your purchase amount � but not when the loan reaches 22 percent equity. (A number of "higher risk" loans are not included.) However, you can actually cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity reaches 20 percent, without consideration of the original price of purchase.
Verify the numbers
Keep a running total of each principal payment. You'll want to be aware of the the purchase amounts of the homes that sell around you. If your loan is fewer than five years old, probably you haven't paid down much principal � you have been paying mostly interest.
The Proof is in the Appraisal
At the point your equity has reached the required twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. Call the mortgage lender to request cancellation of your Private Mortgage Insurance. Then you will be required to submit proof 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), required by most lenders before canceling PMI.
Carter Financial Solutions can help find out if you can eliminate your PMI. Give us a call: 866-840-8745 x2.