Dennis & Sunshine Smith
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|New Law Aids Canceling Mortgage Insurance PMI
(Private Mortgage Insurance) Lenders must notify homeowners!
The Homeowner Protection Act of 1998, which took effect on Thursday, July 29, 1999, will make it easier for homeowners to cancel their private mortgage insurance (PMI) once their home has reached a certain equity level.
Under the new law, PMI will automatically be canceled once a home reaches an equity level of 22 percent (12 to 15 years into the loan); or homeowners can request to cancel their PMI after an equity level of 20 percent is reached (2 to 5 years into the loan). In addition, mortgage lenders will be required to send out notices to homeowners informing them when they are able to cancel their PMI. The new law will not benefit all homeowners, however. For one, it applies only to mortgages originated on or after July 29, 1999. Fannie Mae and Freddie Mac say they will extend the right of automatic cancellation to both old and new mortgage borrowers on most loans, but the government-sponsored enterprises cater only to mortgages of $240,000. You must also be current on your payments or bring them current. Most lenders will require appraisals to prove homeowners have achieved necessary equity levels. However, some lenders will accept a Realtors® Market Analysis.
For qualifications on your loan, check with your lender.
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