Goodbye, PMI!

Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to twenty-two percent or higher. (There are some loans that are excluded -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), no matter the original purchase price, when your equity climbs to twenty percent.

Do your homework

Familiarize yourself with your loan statements to keep track of principal payments. You'll want to keep track of the the purchase prices of the houses that are selling in your neighborhood. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't lowered much.

Verify Equity Amount

At the point your equity has risen to the required twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. First you will tell your lender that you are asking to cancel your PMI. Lenders ask for documentation verifying your eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.

At Lighthouse Mortgage Company, we answer questions about PMI every day. Call us at 9164348915.

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