Make Private Mortgage Insurance a Thing of the Past
Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (A number of "higher risk" loan programs are not included.) But if your equity gets to 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a loan that after July 1999).
Do your homework
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to be aware of the the purchase amounts of the homes that sell in your neighborhood. If your loan is fewer than five years old, chances are you haven't paid down much principal � it's been mostly interest.
Proof of Equity
At the point you find you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will need to call the mortgage lender to let them know that you want to cancel PMI. The lending institution will ask for proof that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
At Tier One Mortgage, LLC, we answer questions about PMI every day. Call us at (585) 282-0960.