Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of '99) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or higher. (Certain "higher risk" morgages are not included.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a mortgage closed past July 1999).
Keep a running total of payments
Keep a running total of your principal payments. You'll want to stay aware of the the purchase prices of the houses that sell in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't gone down much.
Proof of Equity
Once your equity has risen to the desired twenty percent, you are not far away from canceling your PMI payments, once and for all. Call the mortgage lender to request cancellation of PMI. Lending institutions request documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they'll cancel PMI.
Ward Kilduff Mortgage can answer questions about PMI and many others. Give us a call: (860) 658-7100.
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