Goodbye, PMI!

Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of '99) goes beneath seventy-eight percent of the purchase price, but not at the time the loan's equity gets to twenty-two percent or higher. (The legal requirment does not cover certain higher risk mortgages.) However, if your equity gets to 20% (regardless of the original purchase price), you have the legal right to cancel the PMI (for a mortgage loan that past July 1999).

Verify the numbers

Keep track of your principal payments. Find out the selling prices of other homes in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal � you have paid mostly interest.

Proof of Equity

Once your equity has reached the desired twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. First you will notify your lender that you are requesting to cancel your PMI. Lenders ask for paperwork verifying your 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), required by most lending institutions before canceling PMI.

At AmeriBest Mortgage, we answer questions about PMI every day. Give us a call at 3217777277.

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