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Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made past July of '99) goes beneath seventy-eight percent of the price of purchase, but not when the borrower's equity gets to over twenty-two percent. (This legal requirement does not apply to a number of higher risk mortgages.) However, if your equity gets to 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
Familiarize yourself with your monthly statements to keep your eye on principal payments. Find out the selling prices of other houses in your immediate area. If your mortgage is under five years old, chances are you haven't made much progress with the principal - you have paid mostly interest.
The Proof is in the Appraisal
At the point your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, once and for all. Call your lender to request cancellation of your PMI. The lending institution will ask for proof that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
Full Access Mortgage, Inc. (NMLS 1049472) can answer questions about PMI and many others. Give us a call: (402) 502-9037.