For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (The law does not include certain higher risk mortgages.) However, if your equity reaches 20% (regardless of the original price of purchase), you are able to cancel the PMI (for a mortgage closed past July 1999).
Do your homework
Review your monthly statements often. Make yourself aware of the purchase prices of other houses in your immediate area. If your loan is fewer than five years old, it's likely you haven't greatly reduced principal � you have paid mostly interest.
Proof of Equity
As soon as your equity has risen to the desired twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI payments. The lending institution will ask for proof that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
New Millennium Mortgage Co. NMLS: 331173 can help find out if you can eliminate your PMI. Call us: (941) 366-5800.
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