Make Private Mortgage Insurance a Thing of the Past
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For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of the purchase amount - but not at the point the borrower earns 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for loans closed after July 1999) when your equity rises to 20 percent, no matter the original purchase price.
Keep track of payments
Familiarize yourself with your monthly statements to keep your eye on principal payments. Also be aware of what other homes are selling for in your neighborhood. Unfortunately, if yours is a new loan - five years or fewer, you probably haven't had a chance to pay a lot of the principal: you have been paying mostly interest.
Proof of Equity
At the point your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will need to contact your lending institution to alert them that you want to cancel PMI. Lenders ask for proof of eligibility at this point. You can acquire documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
National Asset Mortgage, LLC can answer questions about PMI and many others. Give us a call: (803) 391-3299.