Canceling Private Mortgage Insurance
Although lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance dips below 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (This law does not cover a number of higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgages made past July 1999) when your equity gets to 20 percent, regardless of the original price of purchase.
Do your homework
Keep a running total of each principal payment. Make yourself aware of the selling prices of other homes in your immediate area. If your loan is fewer than five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Verify Equity Amount
Once you determine you've reached 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will first notify your lender that you are requesting to cancel your PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. Usually lenders require 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.
Iltis Lending Group can answer questions about PMI and many others. Call us: (941) 954-4252.