Canceling Private Mortgage Insurance

Although lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (The law does not cover a number of higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan closing past July '99), without considering the original price of purchase, at the point your equity gets to twenty percent.

Verify the numbers

Familiarize yourself with your loan statements to keep your eye on principal payments. Make yourself aware of the prices of other homes in your neighborhood. Unfortunately, if you have a new mortgage - five years or fewer, you likely haven't had a chance to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

You can start the process of PMI cancelation as soon as you you think that your equity has reached 20%. Contact the mortgage lender to ask for cancellation of your PMI. The lending institution will require documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and your lender will probably require one before they agree to cancel.

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

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