Eliminating Private Mortgage Insurance
While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance dips below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is above 22%. (A number of "higher risk" loan programs are excluded.) However, if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel your PMI (for a mortgage closed after July 1999).
Keep a record of payments
Familiarize yourself with your loan statements to keep a running total of principal payments. Make yourself aware of the selling prices of other houses in your immediate area. If your mortgage is under five years old, probably you haven't made much progress with the principal � it's been mostly interest.
Proof of Equity
You can start the process of canceling your PMI as soon as you determine your equity reaches 20%. You will first let your lending institution know that you are requesting to cancel PMI. The lending institution will require documentation that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and most lending institutions will require one before they agree to cancel.
U.S.A. Lending, Inc. can help find out if you can eliminate your PMI. Give us a call: 305-967-7200.