Canceling Private Mortgage Insurance
For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of your purchase price � but not when the borrower achieves 22 percent equity. (Some "higher risk" morgages are not included.) However, if your equity reaches 20% (no matter what the original price was), you can cancel PMI (for a loan closed after July 1999).
Do your homework
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also stay aware of the price that other homes are selling for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't begun to pay much of the principal: you are paying mostly interest.
When you think you have reached 20 percent equity, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will require documentation that your equity is high enough. You can acquire documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
North American Financial nmls#180736, can answer questions about PMI and many others. Call us at (702) 524-1376.
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