Goodbye, PMI!

Although lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the equity is more than 22%. (This legal requirment does not cover a number of higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing after July '99), without considering the original purchase price, when your equity reaches twenty percent.

Keep a running total of payments

Analyze your loan statements often. Find out the prices of other homes in your neighborhood. Unfortunately, if yours is a new mortgage - five years or fewer, you probably haven't been able to pay much of the principal: you have been paying mostly interest.

Proof of Equity

When you find you've reached 20 percent equity, you can begin the process of getting PMI out of your budget. Call the lending institution to ask for cancellation of your PMI. Your lender will require proof that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.

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

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