Canceling Private Mortgage Insurance
Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or higher. (A number of "higher risk" loan programs are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing past July '99), no matter the original price of purchase, after your equity gets to twenty percent.
Do your homework
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to stay aware of the the purchase amounts of the homes that are selling in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.
Proof of Equity
Once you think you have reached 20 percent equity in your home, you can begin the process of getting PMI out of your budget. First you will notify your lender that you are requesting to cancel PMI. Next, you will be asked 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) verifies your equity amount � and your lender will probably request one before they agree to cancel.
At Iltis Lending Group, we answer questions about PMI every day. Call us: (941) 954-4252.