Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the equity is over 22%. (There are exceptions -like a number of "high risk' loans.) But you are able to cancel PMI yourself (for mortgage loans closed after July 1999) once your equity reaches 20 percent, regardless of the original purchase price.
Do your homework
Familiarize yourself with your loan statements to keep track of principal payments. Find out the purchase prices of other houses in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't paid down much principal � you have been paying mostly interest.
The Proof is in the Appraisal
You can start the process of canceling your PMI as soon as you determine your equity has risen to 20%. Call the lender to ask for cancellation of PMI. The lending institution will ask for proof that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
New Millennium Mortgage Co. NMLS: 331173 can answer questions about PMI and many others. Call us: (941) 366-5800.
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