Make Private Mortgage Insurance a Thing of the Past

Although lenders have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance dips below 78% of the purchase price, they do not have to take similar action if the equity is more than 22%. (A number of "higher risk" loan programs are excluded.) However, you can actually cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity gets to 20 percent, no matter the original purchase price.

Verify the numbers

Familiarize yourself with your mortgage statements to keep track of principal payments. Also keep track of how much other homes are being sold for in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't gone down much.

Verify Equity Amount

You can start the process of canceling PMI at the time you're sure your equity reaches 20%. Call your mortgage lender to request cancellation of PMI. Lenders ask for paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lenders will require one before they agree to cancel.

Foxfield Financial can help find out if you can eliminate your PMI. Give us a call at 720-598-8300.

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