Make Private Mortgage Insurance a Thing of the Past

For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (This legal requirment does not apply to certain higher risk mortgages.) But if your equity gets to 20% (no matter what the original price was), you are able to cancel PMI (for a mortgage closed after July 1999).

Keep a running total of payments

Keep track of money going toward the principal. You'll want to stay aware of the the purchase amounts of the houses that sell around you. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.

The Proof is in the Appraisal

You can begin the process of canceling PMI at the time you're sure your equity has reached 20%. You will first tell your lender that you are requesting to cancel your PMI. Lenders ask for paperwork verifying your eligibility at this point. You can get proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions 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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