Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed after July of that year) goes beneath seventy-eight percent of the price of purchase, but not at the point the loan's equity gets to twenty-two percent or more. (This law does not apply to a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgage loans made after July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.
Keep a running total of payments
Study your statements often. Pay attention to the prices of other homes in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
Proof of Equity
As soon as your equity has reached the magic number of twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. You will first let your lender know that you are asking to cancel your PMI. Lenders request proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
At Ward Kilduff Mortgage, we answer questions about PMI every day. Give us a call: (860) 658-7100.
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