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For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78 percent of your purchase price - but not when the loan reaches 22 percent equity. (A number of "higher risk" mortgage loans are excluded.) The good news is that you can cancel your PMI yourself (for a loan closing after July '99), no matter the original price of purchase, once the equity climbs to twenty percent.
Keep a record of payments
Review your statements often. Also stay aware of what other homes are purchased for in your neighborhood. If your loan is fewer than five years old, it's likely you haven't paid down much principal - it's been mostly interest.
The Proof is in the Appraisal
At the point your equity has risen to the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. You will need to call your lender to let them know that you want to cancel PMI. Next, you will be asked 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) verifies your equity amount - and most lenders require one before they agree to cancel.
Mann Mortgage can answer questions about PMI and many others. Call us: (808) 264-3715.
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