Eliminating Private Mortgage Insurance

Although lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is more than 22%. (Certain "higher risk" loan programs are not included.) The good news is that you can cancel your PMI yourself (for a loan that closed after July '99), no matter the original price of purchase, when your equity reaches twenty percent.

Verify the numbers

Familiarize yourself with your loan statements to keep a running total of principal payments. You'll want to keep track of the the purchase prices of the homes that are selling in your neighborhood. If your loan is fewer than five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.

The Proof is in the Appraisal

At the point you determine you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. You will first tell your lender that you are requesting to cancel PMI. Lending institutions request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel PMI.

Abbey Mortgage can answer questions about PMI and many others. Give us a call at 352-369-4200.

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