Eliminating Private Mortgage Insurance From Your Texas Home Loan
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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 falls under 78 percent of your purchase amount - but not at the point the loan reaches 22 percent equity. (This legal obligation does not include a number of higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) when your equity rises to 20 percent, no matter the original price of purchase.
Keep a record of payments
Analyze your mortgage statements often. Also be aware of what other homes are purchased for in your neighborhood. If your loan is fewer than five years old, chances are you haven't made much progress with the principal - you have paid mostly interest.
The Proof is in the Appraisal
Once you find you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. You will first tell your lender that you are requesting to cancel your PMI. Lenders require paperwork verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is - and most lending institutions require one before they agree to cancel.
Many home owners refinance their mortgages to eliminate mortgage insurance. For instance, if you obtained an FHA mortgage within the last several years, you may have mortgage insurance for the life of your loan. Home values have risen, so the home may have enough equity to refinance the new loan below the 80% market, thus eliminating the permanent mortgage insurance.
The Richard Woodward Mortgage Team can help find out if you can eliminate your PMI. Call us at (214) 945-1066 or Apply Now
. We have so many Texas home owners save thousands of dollars and we can help you too!