Make Private Mortgage Insurance a Thing of the Past
For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of your purchase amount � but not when the loan reaches 22 percent equity. (The legal requirment does not include some higher risk mortgages.) But if your equity gets to 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a mortgage loan that past July 1999).
Keep a record of payments
Keep a running total of each principal payment. Also be aware of how much other homes are selling for in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
The Proof is in the Appraisal
You can begin the process of PMI cancelation when you're sure your equity has risen to 20%. First you will notify your lender that you are requesting to cancel your PMI. Next, you will be required to verify that you are eligible to cancel. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about PMI every day. Give us a call: (808) 935-0678.
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