Make Private Mortgage Insurance a Thing of the Past

While lenders have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance dips under 78% of the price of purchase, they do not have to take similar action if the borrower's equity is more than 22%. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage that past July 1999).

Verify the numbers

Keep a running total of your principal payments. You'll want to keep track of the prices of the houses that are selling around you. Unfortunately, if yours is a new mortgage loan - five years or fewer, you likely haven't had a chance to pay much of the principal: you are paying mostly interest.

Proof of Equity

At the point your equity has reached the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will need to call the lending institution to alert them that you want to cancel PMI. Then you will be asked to submit documentation that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions will require one before they agree to cancel.

Foxfield Financial can answer questions about PMI and many others. Call us: 720-598-8300.

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