Eliminating Private Mortgage Insurance
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While lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance dips under 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (There are exceptions -like a number of "high risk' loans.) However, if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage loan closed after July 1999).
Do your homework
Study your statements often. Also keep track of how much other homes are being sold for in your neighborhood. Unfortunately, if yours is a new loan - five years or fewer, you probably haven't started to pay a lot of the principal: you have been paying mostly interest.
Proof of Equity
You can start the process of PMI cancellation when you're sure your equity has reached 20%. Call your lender to ask for cancellation of your Private Mortgage Insurance. The lending institution will ask for documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Superior Mortgage Services, Inc. can help find out if you can eliminate your PMI. Give us a call: 513-474-0899.
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