Make Private Mortgage Insurance a Thing of the Past
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Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) goes under seventy-eight percent of the price of purchase, but not when the loan's equity gets to twenty-two percent or higher. (The legal obligation does not cover a number of higher risk mortgages.) But if your equity reaches 20% (no matter what the original purchase price was), you are able to cancel the PMI (for a loan that after July 1999).
Keep a running total of payments
Keep track of money going toward the principal. Also be aware of what other homes are purchased for in your neighborhood. If your loan is under five years old, chances are you haven't made much progress with the principal - you have paid mostly interest.
Proof of Equity
At the point you determine you have achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. Call your mortgage lender to request cancellation of your PMI. Your lender will ask for documentation that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
At Peoples Discount Mortgage, we answer questions about PMI every day. Call us: 909-660-8333.
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