Goodbye, PMI!

Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity gets to twenty-two percent or higher. (Some "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), no matter the original price of purchase, after the equity climbs to twenty percent.

Do your homework

Keep track of each principal payment. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. Unfortunately, if you have a new mortgage - five years or fewer, you likely haven't started to pay very much of the principal: you have been paying mostly interest.

Proof of Equity

Once your equity has risen to the required twenty percent, you are not far away from getting rid of your PMI payments, for the life of your loan. First you will let your lending institution know that you are asking to cancel PMI. Your lender will request documentation that your equity is at 20 percent or above. Usually 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 canceling PMI.

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

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