Canceling Private Mortgage Insurance
For loans made since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like certain "high risk' loans.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel your PMI (for a mortgage that after July 1999).
Verify the numbers
Keep a running total of your principal payments. You'll want to be aware of the prices of the houses that sell in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
The Proof is in the Appraisal
You can begin the process of PMI cancelation when you you think that your equity has risen to 20%. Call the mortgage lender to request cancellation of your Private Mortgage Insurance. Your lender will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
Saab Mortgage can answer questions about PMI and many others. Give us a call: 703-288-0777.
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