Make Private Mortgage Insurance a Thing of the Past
Since 1999, lending institutions have been obligated to cancel a borrower’s Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of that year) goes below seventy-eight percent of the price of purchase, but not when the borrower’s equity climbs to twenty-two percent or more. (Certain “higher risk” loan programs are not included.) 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).
Do your homework
Review your statements often. Find out the purchase prices of other homes in your immediate area. If your mortgage is under five years old, probably you haven’t greatly reduced principal � you have paid mostly interest.
Proof of Equity
When you find you have reached 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. First you will notify your lender that you are asking to cancel your PMI. Next, you will be asked to submit documentation that you have at least 20 percent equity. You can acquire documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.