Goodbye, PMI!

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For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of the purchase amount - but not when the borrower earns 22 percent equity. (This legal requirement does not include some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), no matter the original price of purchase, after the equity rises to twenty percent.

Verify the numbers

Keep a running total of money going toward the principal. Also keep track of what other homes are being sold for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

The Proof is in the Appraisal

At the point you find you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. First you will let your lender know that you are asking to cancel your PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need - and most lenders will require one before they agree to cancel PMI.

Bliss Mortgage LLC can answer questions about PMI and many others. Give us a call at 813-966-1888.

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