Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity gets to more than twenty-two percent. (Some "higher risk" morgages are excluded.) But you can actually cancel PMI yourself (for mortgages closed past July 1999) once your equity reaches 20 percent, regardless of the original purchase price.
Do your homework
Keep a running total of each principal payment. Also keep track of what other homes are selling for in your neighborhood. If your mortgage is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.
At the point you find you've achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. Call your lender to request cancellation of your Private Mortgage Insurance. Your lender will require documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
Longhorn Mortgage can answer questions about PMI and many others. Call us: 512-302-9410.
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