Make Private Mortgage Insurance a Thing of the Past
Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of '99) goes under seventy-eight percent of the purchase price, but not when the loan's equity climbs to over twenty-two percent. (Certain "higher risk" mortgage loans are excluded.) However, if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel your PMI (for a loan closed after July 1999).
Verify the numbers
Keep track of your principal payments. Also keep track of what other homes are purchased for in your neighborhood. Unfortunately, if you have a recent mortgage - five years or fewer, you probably haven't been able to pay very much of the principal: you are paying mostly interest.
Proof of Equity
When you think you've achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. You will first tell your lender that you are asking to cancel your PMI. The lending institution will ask for documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
At U.S.A. Lending, Inc., we answer questions about PMI every day. Call us: 305-967-7200.