Make Private Mortgage Insurance a Thing of the Past
For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you are able to cancel the PMI (for a mortgage loan closed after July 1999).
Do your homework
Familiarize yourself with your monthly statements to keep your eye on principal payments. Also stay aware of how much other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
You can begin the process of canceling PMI at the time you're sure your equity has risen to 20%. You will first notify your lender that you are requesting to cancel your PMI. Your lender will ask for proof that your equity is at 20 percent or above. You can acquire proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
At Iltis Lending Group, we answer questions about PMI every day. Give us a call: (941) 954-4252.