YOU ASK:

How can I request for cancellation of private mortgage insurance on my mortgage loan?

WE ANSWER:

Once you are able to have at least 20% equity on your home, you are now allowed to cancel private mortgage insurance coverage on your home loan. Cancelling the private mortgage insurance early can save you hundreds (and even thousands) of dollars in the long term.

Private mortgage insurance is something that borrowers would want to get rid of because it does not protect his interests. It protects the interest of the lender. And it also adds to the cost of the monthly payments. Thus, it is wise to be able to cancel it as soon as possible and then.

The new housing law has enabled buyers to have an easier time of cancelling their private mortgage insurance coverage. For one, the lender is required to notify the borrower of his right to cancel - and the lender has to give this reminder every year. The lender is also obligated to automatically cancel the private mortgage insurance when the equity reaches 78%.

This new law covers home mortgages closed on or after July 29, 1999. The law only covers loans from private lending institutions. It will not apply to VA loans, government-insured FHA loans, as well as loans where it is the lender that pays for the private mortgage insurance.

You can also opt to request for the cancellation of your PMI once your equity has reached the 20% level. What you can do is to write a letter to your lender asking for the cancellation of the mortgage insurance. If you are not yet eligible for cancellation, the lender will tell you so. Be sure to have your letter sent through registered mail.

You should also note that there are restrictions as to when your PMI can be cancelled, aside from the equity percentage requirement. You should prove that you are not a high risk loan by paying your amortizations regularly and without fail. That means you should keep your account current at all time. There should also be no liens on the property.

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