Canceling Private Mortgage Insurance
While lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance dips below 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is over 22%. (There are exceptions -like some loans considered 'high risk'.) But if your equity reaches 20% (no matter what the original purchase price was), you are able to cancel PMI (for a loan that past July 1999).
Keep a record of payments
Keep a running total of money going toward the principal. Also be aware of how much other homes are purchased for in your neighborhood. If your loan is fewer than five years old, probably you haven't greatly reduced principal � you have paid mostly interest.
Proof of Equity
You can start the process of PMI cancelation at the time you calculate that your equity reaches 20%. You will first tell your lender that you are asking to cancel PMI. The lending institution will request proof that your equity is high enough. 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 lenders before canceling PMI.
Ward Kilduff Mortgage can answer questions about PMI and many others. Give us a call at (860) 658-7100.
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