Canceling Private Mortgage Insurance

Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (Some "higher risk" loans are excluded.) However, if your equity rises to 20% (regardless of the original purchase price), you are able to cancel your PMI (for a mortgage loan that past July 1999).

Keep a running total of payments

Keep a running total of each principal payment. Pay attention to the prices of other houses in your neighborhood. If your loan is fewer than five years old, it's likely you haven't paid down much principal � you have paid mostly interest.

The Proof is in the Appraisal

You can start the process of PMI cancelation at the time you calculate that your equity has reached 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions require paperwork verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and almost all lending institutions will require one before they agree to cancel.

Trustin Mortgage, LLC can help find out if you can eliminate your PMI. Give us a call at (302) 765-8089.

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