Make Private Mortgage Insurance a Thing of the Past

While lending institutions have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance goes below 78% of the price of purchase, they do not have to take similar action if the equity is more than 22%. (The legal requirment does not cover certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a loan closing past July '99), without considering the original price of purchase, when your equity rises to twenty percent.

Keep a running total of payments

Keep track of each principal payment. Find out the prices of other homes in your immediate area. Unfortunately, if yours is a new loan - five years or under, you probably haven't been able to pay a lot of the principal: you have been paying mostly interest.

Proof of Equity

When you think you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. Contact the lending institution to request cancellation of your PMI. Next, you will be asked to submit documentation that you are eligible to cancel. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.

Hawk Mortgage Group can help find out if you can eliminate your PMI. Give us a call: (443) 619-7900.

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