Eliminating Private Mortgage Insurance
Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of that year) goes beneath seventy-eight percent of the purchase price, but not at the point the borrower's equity climbs to over twenty-two percent. (A number of "higher risk" loans are excluded.) But if your equity gets to 20% (no matter what the original price was), you can cancel PMI (for a mortgage loan that past July 1999).
Verify the numbers
Study your statements often. Pay attention to the selling prices of other houses in your neighborhood. If your mortgage is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
Proof of Equity
You can begin the process of PMI cancelation at the time you're sure your equity has reached 20%. You will first let your lending institution know that you are requesting to cancel your PMI. Then you will be required to submit documentation that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and almost all lenders request one before they'll cancel PMI.
At Saab Mortgage, we answer questions about PMI every day. Call us: 703-288-0777.
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