Goodbye, PMI!

For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase price � but not at the point the borrower earns 22 percent equity. (This legal obligation does not cover certain higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity reaches 20 percent, regardless of the original price of purchase.

Keep track of payments

Keep track of each principal payment. Also be aware of what other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.

The Proof is in the Appraisal

Once your equity has reached the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. Contact the lender to request cancellation of PMI. Lenders request paperwork verifying your eligibility at this point. You can get documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.

AmeriBest Mortgage can answer questions about PMI and many others. Give us a call: 3217777277.

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