Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity climbs to over twenty-two percent. (The law does not cover a number of higher risk mortgages.) However, if your equity gets to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a mortgage that after July 1999).
Keep track of your principal payments. Pay attention to the selling prices of other homes in your immediate area. Unfortunately, if yours is a new loan - five years or under, you likely haven't begun to pay much of the principal: you are paying mostly interest.
You can start the process of canceling PMI when you you think that your equity reaches 20%. First you will tell your lender that you are asking to cancel PMI. Your lender will ask for documentation that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.