Eliminating Private Mortgage Insurance
Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made after July of that year) goes beneath seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or more. (The legal requirment does not cover some higher risk mortgages.) But if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel PMI (for a loan that after July 1999).
Verify the numbers
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Make yourself aware of the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't been able to pay a lot of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
At the point you think you've reached 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. The lending institution will request proof that your equity is high enough. 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 PMI cancellation.
One Source Lending 303-220-7500 can answer questions about PMI and many others. Call us at 303-220-7500.