Make Private Mortgage Insurance a Thing of the Past

Although lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance gets under 78% of the purchase price, they do not have to take similar action if the borrower's equity is above 22%. (Some "higher risk" loan programs are not included.) But if your equity reaches 20% (regardless of the original purchase price), you can cancel the PMI (for a mortgage loan that after July 1999).

Verify the numbers

Keep track of your principal payments. You'll want to keep track of the the purchase prices of the homes that are selling around you. Unfortunately, if you have a recent mortgage - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.

The Proof is in the Appraisal

At the point your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first let your lending institution know that you are requesting to cancel your PMI. Your lender will ask for documentation that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.

At Atlantic Financial Services, we answer questions about PMI every day. Give us a call: (732) 969-9300.

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