Make Private Mortgage Insurance a Thing of the Past

Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made after July of that year) goes below seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or more. (Certain "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), without considering the original purchase price, at the point the equity rises to twenty percent.

Verify the numbers

Review your statements often. Find out the prices of other houses in your immediate area. Unfortunately, if you have a new loan - five years or under, you likely haven't had a chance to pay much of the principal: you have been paying mostly interest.

Proof of Equity

You can begin the process of PMI cancelation when you determine your equity has risen to 20%. First you will tell your lender that you are asking to cancel PMI. Lending institutions request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

Atlantic Financial Services can answer questions about PMI and many others. Give us a call at (732) 969-9300.

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