Canceling Private Mortgage Insurance

Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) goes down below seventy-eight percent of the price of purchase, but not when the borrower's equity gets to more than twenty-two percent. (There are exceptions -like some "high risk' loans.) But if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage closed after July 1999).

Keep a record of payments

Study your monthly statements often. Pay attention to the prices of other homes in your immediate area. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't gone down much.

Proof of Equity

Once your equity has reached the desired twenty percent, you are close to canceling your PMI payments, once and for all. First you will let your lending institution know that you are asking to cancel PMI. The lending institution will require documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and most lenders request one before they agree to cancel.

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

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