Make Private Mortgage Insurance a Thing of the Past
For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of the purchase price � but not at the point the borrower achieves 22 percent equity. (This law does not include certain higher risk mortgages.) But you can actually cancel PMI yourself (for mortgages closed after July 1999) once your equity gets to 20 percent, regardless of the original purchase price.
Verify the numbers
Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to stay aware of the the purchase prices of the homes that sell around you. If your mortgage is fewer than five years old, it's likely you haven't greatly reduced principal � you have paid mostly interest.
The Proof is in the Appraisal
At the point your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI. Your lender will ask for proof that your equity is high enough. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
U.S.A. Lending, Inc. can help find out if you can eliminate your PMI. Give us a call: 305-967-7200.