Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the balance goes under 78% of the price of purchase, they do not have to take similar action if the equity is over 22%. (The legal obligation does not cover some higher risk mortgages.) But if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a loan that past July 1999).

Keep track of payments

Keep track of each principal payment. Pay attention to the selling prices of other homes in your immediate area. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't started to pay a lot of the principal: you have been paying mostly interest.

Verify Equity Amount

At the point your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will need to contact your lending institution to alert them that you wish to cancel PMI payments. Lenders require proof of eligibility at this point. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

At Chris Caggiano - Grand Oaks Funding, LLC, we answer questions about PMI every day. Give us a call at (718) 477-4405.

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