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Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity reaches twenty-two percent or higher. (The law does not apply to a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for loans closed past July 1999) once your equity rises to 20 percent, regardless of the original purchase price.
Verify the numbers
Familiarize yourself with your loan statements to keep track of principal payments. Also stay aware of what other homes are being sold for in your neighborhood. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
Proof of Equity
Once you determine you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. You will first tell your lender that you are requesting to cancel PMI. Then you will be asked to verify that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
Secured Horizon Financial Group, Inc can help find out if you can eliminate your PMI. Give us a call: (305) 891-6500.