Make Private Mortgage Insurance a Thing of the Past

Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance goes below 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is over 22%. (A number of "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for a mortgage loan that closed after July '99), no matter the original purchase price, when your equity climbs to twenty percent.

Keep track of payments

Familiarize yourself with your monthly statements to keep track of principal payments. Pay attention to the prices of other houses in your immediate area. If your loan is under five years old, it's likely you haven't paid down much principal � you have been paying mostly interest.

Proof of Equity

You can start the process of canceling your PMI at the time you're sure your equity has reached 20%. Call the lending institution to ask for cancellation of your PMI. The lending institution will require documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably require one before they agree to cancel PMI.

At Hawk Mortgage Group, we answer questions about PMI every day. Give us a call: (443) 619-7900.

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