Make Private Mortgage Insurance a Thing of the Past
Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity gets to more than twenty-two percent. (This legal obligation does not apply to certain higher risk mortgages.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a loan closed after July 1999).
Do your homework
Study your statements often. Also be aware of the price that other homes are selling for in your neighborhood. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't been reduced by much.
The Proof is in the Appraisal
At the point your equity has risen to the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. Contact your lender to request cancellation of your Private Mortgage Insurance. Your lender will request proof that your equity is at 20 percent or above. You can acquire documentation of your home's equity by getting a state certified appraisal using 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. Call us: 866-840-8745 x2.