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While lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips below 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is more than 22%. (This law does not apply to some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), no matter the original purchase price, at the point your equity reaches twenty percent.
Do your homework
Keep track of money going toward the principal. Find out the prices of other homes in your immediate area. Unfortunately, if you have a new mortgage - five years or under, you likely haven't begun to pay a lot of the principal: you are paying mostly interest.
The Proof is in the Appraisal
Once your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first let your lender know that you are requesting to cancel your PMI. The lending institution will ask for documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Sierra View Financial Corp can answer questions about PMI and many others. Call us: 916-989-6222.