Make Private Mortgage Insurance a Thing of the Past
For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of the purchase amount � but not at the point the borrower achieves 22 percent equity. (Certain "higher risk" loan programs are not included.) But you have the right to cancel PMI yourself (for loans made after July 1999) once your equity reaches 20 percent, without consideration of the original price of purchase.
Keep a record of payments
Review your mortgage statements often. You'll want to be aware of the prices of the houses that sell around you. If your mortgage is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.
As soon as your equity has risen to the magic number of 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 want to cancel PMI. Your lender will request proof that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
At Iltis Lending Group, we answer questions about PMI every day. Call us at (941) 954-4252.