Make Private Mortgage Insurance a Thing of the Past
Although lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is over 22%. (Certain "higher risk" loans are excluded.) However, you can actually cancel PMI yourself (for mortgages made past July 1999) at the point your equity gets to 20 percent, without consideration of the original price of purchase.
Keep a record of payments
Review your statements often. Also be aware of what other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't paid down much principal � you have paid mostly interest.
Verify Equity Amount
As soon as your equity has reached the magic number of twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. Call your lending institution to request cancellation of PMI. Lenders ask for paperwork verifying your eligibility at this point. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
At Saab Mortgage, we answer questions about PMI every day. Give us a call: 703-288-0777.
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