Make Private Mortgage Insurance a Thing of the Past
For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (A number of "higher risk" mortgage loans are not included.) However, you are able to cancel PMI yourself (for mortgages closed after July 1999) when your equity gets to 20 percent, no matter the original price of purchase.
Keep a record of payments
Review your statements often. You'll want to be aware of the the purchase amounts of the homes that are selling in your neighborhood. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't gone down much.
Proof of Equity
When you find you've reached 20 percent equity in your home, you can begin the process of getting PMI out of your budget. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be asked to submit documentation that you are eligible to cancel. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
House Loans Mortgage Services Corp can help find out if you can eliminate your PMI. Give us a call at 877-696-4687.