Eliminating Private Mortgage Insurance
Although lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (The law does not cover a number of higher risk mortgages.) But if your equity rises to 20% (regardless of the original purchase price), you have the legal right to cancel the PMI (for a mortgage loan that past July 1999).
Keep a running total of payments
Keep a running total of money going toward the principal. Also be aware of how much other homes are being sold for in your neighborhood. If your loan is fewer than five years old, probably you haven't paid down much principal � you have paid mostly interest.
Verify Equity Amount
You can start the process of canceling PMI at the time you're sure your equity reaches 20%. Call the lending institution to request cancellation of PMI. The lending institution will require proof that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lenders request one before they'll cancel PMI.
U.S.A. Lending, Inc. can answer questions about PMI and many others. Give us a call: 305-967-7200.