Canceling Private Mortgage Insurance
While lending institutions have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance gets under 78% of the price of purchase, they do not have to cancel automatically if the equity is above 22%. (There are some exceptions -like some "high risk' loans.) But you are able to cancel PMI yourself (for loans closed after July 1999) when your equity rises to 20 percent, regardless of the original price of purchase.
Do your homework
Study your loan statements often. You'll want to keep track of the the purchase prices of the houses that are selling around you. If your mortgage is fewer than five years old, it's likely you haven't paid down much principal � it's been mostly interest.
The Proof is in the Appraisal
When you find you've reached 20 percent equity, you can start the process of freeing yourself from PMI payments. Contact your lender to ask for cancellation of PMI. Lending institutions request proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
Ward Kilduff Mortgage can help find out if you can eliminate your PMI. Give us a call: (860) 658-7100.
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