Make Private Mortgage Insurance a Thing of the Past
For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (There are exceptions -like certain "high risk' loans.) But if your equity rises to 20% (regardless of the original purchase price), you have the right to cancel the PMI (for a mortgage closed past July 1999).
Do your homework
Analyze your statements often. Find out the selling prices of other houses in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't started to pay a lot of the principal: you are paying mostly interest.
Proof of Equity
Once you think you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will first let your lending institution know that you are requesting to cancel your PMI. Next, you will be asked to verify that you have at least 20 percent equity. 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.
At Carter Financial Solutions, we answer questions about PMI every day. Give us a call at 866-840-8745 x2.