Eliminating Private Mortgage Insurance

Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) goes down below seventy-eight percent of the purchase price, but not at the point the borrower's equity reaches higher than twenty-two percent. (Certain "higher risk" loan programs are not included.) But if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage loan that past July 1999).

Do your homework

Keep track of money going toward the principal. Pay attention to the purchase prices of other homes in your immediate area. If your loan is under five years old, chances are you haven't greatly reduced principal � you have paid mostly interest.

The Proof is in the Appraisal

You can start the process of canceling PMI as soon as you're sure your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. The lending institution will request documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

Hawk Mortgage Group can answer questions about PMI and many others. Call us at (443) 619-7900.

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