Canceling Private Mortgage Insurance

Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or higher. (This law does not apply to some higher risk mortgages.) But you are able to cancel PMI yourself (for mortgage loans made past July 1999) when your equity gets to 20 percent, no matter the original purchase price.

Verify the numbers

Study your mortgage statements often. You'll want to keep track of the the purchase amounts of the houses that sell in your neighborhood. Unfortunately, if yours is a new loan - five years or fewer, you probably haven't started to pay very much of the principal: you are paying mostly interest.

Proof of Equity

As soon as your equity has reached the required twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. Call the lender to request cancellation of your Private Mortgage Insurance. The lending institution will require documentation that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they'll cancel PMI.

Ward Kilduff Mortgage can help find out if you can eliminate your PMI. Give us a call at (860) 658-7100.

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