Eliminating Private Mortgage Insurance
Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity reaches twenty-two percent or more. (A number of "higher risk" morgages are excluded.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed after July '99), no matter the original purchase price, after your equity gets to twenty percent.
Keep track of payments
Keep track of each principal payment. Also be aware of how much other homes are selling for in your neighborhood. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.
Verify Equity Amount
You can begin the process of PMI cancelation when you you think that your equity has risen to 20%. First you will tell your lender that you are asking to cancel your PMI. Next, you will be required to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and most lenders will require one before they'll cancel PMI.
At Tier One Mortgage, LLC, we answer questions about PMI every day. Give us a call: (585) 282-0960.