Make Private Mortgage Insurance a Thing of the Past
Although lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the borrower's equity is more than 22%. (The law does not cover some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing after July '99), no matter the original purchase price, once the equity gets to twenty percent.
Do your homework
Keep a running total of money going toward the principal. You'll want to keep track of the prices of the homes that sell in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you probably haven't begun to pay a lot of the principal: you are paying mostly interest.
Verify Equity Amount
At the point your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first tell your lender that you are asking to cancel your PMI. Lending institutions require documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel.
At Chase Mortgage, we answer questions about PMI every day. Call us at 435-755-6622.