Although lenders have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance dips under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is over 22%. (This legal requirment does not include some higher risk mortgages.) But if your equity reaches 20% (no matter what the original price was), you have the right to cancel PMI (for a mortgage that past July 1999).
Do your homework
Keep a running total of each principal payment. Pay attention to the purchase prices of other homes in your immediate area. If your loan is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.
Verify Equity Amount
As soon as your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. First you will tell your lender that you are requesting to cancel PMI. Then you will be asked to verify that you are eligible to cancel. You can get proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
Ward Kilduff Mortgage can help find out if you can eliminate your PMI. Call us: (860) 658-7100.
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