Eliminating Private Mortgage Insurance
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Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or higher. (Some "higher risk" loan programs are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), regardless of the original price of purchase, after your equity gets to twenty percent.
Keep a record of payments
Review your mortgage statements often. Find out the selling prices of other houses in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
The Proof is in the Appraisal
You can start the process of canceling PMI when you're sure your equity reaches 20%. First you will let your lending institution know that you are requesting to cancel PMI. Then you will be required to submit documentation that you have at least 20 percent equity. You can get documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
At Community Bank of Oelwein, we answer questions about PMI every day. Give us a call at 319-283-4000.