Make Private Mortgage Insurance a Thing of the Past
For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase amount � but not at the point the borrower earns 22 percent equity. (This law does not include a number of higher risk mortgages.) But you are able to cancel PMI yourself (for loans made after July 1999) once your equity gets to 20 percent, without consideration of the original price of purchase.
Verify the numbers
Familiarize yourself with your loan statements to keep your eye on principal payments. Make yourself aware of the purchase prices of other houses in your immediate area. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
The Proof is in the Appraisal
You can begin the process of PMI cancelation as soon as you're sure your equity has reached 20%. Contact your lending institution to request cancellation of your Private Mortgage Insurance. Lenders require proof of eligibility at this point. 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 lenders before canceling PMI.
Tier One Mortgage, LLC can help find out if you can eliminate your PMI. Give us a call: (585) 282-0960.