Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of that year) goes under seventy-eight percent of the price of purchase, but not at the time the borrower's equity reaches higher than twenty-two percent. (There are some loans that are not included -like some loans considered 'high risk'.) But if your equity rises to 20% (no matter what the original price was), you are able to cancel PMI (for a mortgage that past July 1999).

Verify the numbers

Study your statements often. Find out the selling prices of other homes in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you likely haven't been able to pay very much of the principal: you are paying mostly interest.

Proof of Equity

You can start the process of PMI cancelation at the time you calculate that your equity has reached 20%. Call your lending institution to request cancellation of your Private Mortgage Insurance. Lending institutions require documentation verifying your eligibility at this point. Usually 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.

At Custom Lending Group, we answer questions about PMI every day. Call us at (707) 252-2700.

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