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Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to more than twenty-two percent. (Certain "higher risk" mortgage loans are excluded.) The good news is that you can request cancellation of your PMI yourself (for a mortgage loan closing past July '99), no matter the original purchase price, after your equity rises to twenty percent.
Keep a record of payments
Study your statements often. Make yourself aware of the purchase prices of other houses in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
Verify Equity Amount
As soon as your equity has risen to the magic number of twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will first tell your lender that you are asking to cancel PMI. Next, you will be asked to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
Community Mortgage Corp. can answer questions about PMI and many others. Call us: (630) 534-5500.