Canceling Private Mortgage Insurance
Although lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the price of purchase, they do not have to take similar action if the borrower's equity is over 22%. (This legal obligation does not cover certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed past July '99), without considering the original price of purchase, once the equity reaches twenty percent.
Keep a running total of payments
Keep a running total of each principal payment. Also be aware of the price that other homes are being sold for in your neighborhood. If your loan is fewer than five years old, probably you haven't paid down much principal � you have paid mostly interest.
Verify Equity Amount
At the point your equity has reached the desired twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. First you will tell your lender that you are asking to cancel your PMI. Lenders require paperwork verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel.
Ward Kilduff Mortgage can answer questions about PMI and many others. Give us a call at (860) 658-7100.
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