Canceling Private Mortgage Insurance
Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of that year) goes down below seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or more. (This legal obligation does not cover certain higher risk mortgages.) But if your equity rises to 20% (no matter what the original price was), you are able to cancel PMI (for a loan closed after July 1999).
Verify the numbers
Study your statements often. Make yourself aware of the prices of other houses in your immediate area. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
Proof of Equity
At the point your equity has reached the required twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be required to submit documentation that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions will require one before they agree to cancel.
At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about PMI every day. Give us a call at (808) 935-0678.
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