Make Private Mortgage Insurance a Thing of the Past

While lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the balance dips under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is above 22%. (There are some exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (regardless of the original price of purchase), you are able to cancel the PMI (for a mortgage loan that after July 1999).

Do your homework

Study your statements often. You'll want to keep track of the the purchase amounts of the houses that are selling around you. Unfortunately, if yours is a new mortgage loan - five years or under, you probably haven't had a chance to pay much of the principal: you are paying mostly interest.

Proof of Equity

When you find you have reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will need to call the lending institution to alert them that you wish to cancel PMI. The lending institution will request documentation that your equity is at 20 percent or above. Most lenders require 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.

At Hawk Mortgage Group, we answer questions about PMI every day. Call us at (443) 619-7900.

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