Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is above 22%. (This legal obligation does not cover certain higher risk mortgages.) But you are able to cancel PMI yourself (for mortgage loans closed after July 1999) once your equity reaches 20 percent, regardless of the original price of purchase.

Verify the numbers

Keep track of each principal payment. Find out the purchase prices of other houses in your neighborhood. If your mortgage is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.

Proof of Equity

Once your equity has risen to the desired twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. You will first tell your lender that you are requesting to cancel your PMI. Then you will be asked to verify that you are eligible to cancel. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.

Moonstar Mortgage can answer questions about PMI and many others. Give us a call: 847-278-7220.

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