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Although lending institutions have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance dips below 78% of the purchase price, they do not have to take similar action if the equity is over 22%. (There are some loans that are not included -like some "high risk' loans.) But if your equity gets to 20% (regardless of the original purchase price), you can cancel PMI (for a loan closed after July 1999).
Keep a running total of payments
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to be aware of the prices of the homes that sell in your neighborhood. Unfortunately, if you have a new loan - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.
The Proof is in the Appraisal
As soon as your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. Call the lender to ask for cancellation of your Private Mortgage Insurance. Your lender will ask for documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
www.JordanWilde.com can help find out if you can eliminate your PMI. Give us a call: 469.450.9453.
