Eliminating Private Mortgage Insurance
For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (There are exceptions -like a number of "high risk' loans.) But you are able to cancel PMI yourself (for mortgage loans made past July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.
Keep a running total of payments
Keep a running total of each principal payment. Also keep track of how much other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't begun to pay very much of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
Once your equity has reached the magic number of twenty percent, you are close to canceling your PMI payments, for the life of your loan. First you will let your lending institution know that you are asking to cancel your PMI. The lending institution will ask for documentation that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions require one before they'll cancel PMI.
Contemporary Mortgage Services, Inc can help find out if you can eliminate your PMI. Call us at 407-834-3377.
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