For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (A number of "higher risk" loan programs are excluded.) But you are able to cancel PMI yourself (for mortgages made after July 1999) once your equity gets to 20 percent, regardless of the original purchase price.
Keep a running total of payments
Analyze your statements often. Make yourself aware of the prices of other homes in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
The Proof is in the Appraisal
You can begin the process of PMI cancelation when you determine your equity reaches 20%. You will need to call your mortgage lender to alert them that you want to cancel PMI. Then you will be asked to verify that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they agree to cancel PMI.
Real Property Finance can answer questions about PMI and many others. Give us a call: 310-379-5997.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.