Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of '99) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to higher than twenty-two percent. (This legal obligation does not include some higher risk mortgages.) However, if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel the PMI (for a mortgage loan that after July 1999).
Familiarize yourself with your loan statements to keep a running total of principal payments. Find out the purchase prices of other houses in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't lowered much.
At the point your equity has risen to the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. Call the lending institution to ask for cancellation of your PMI. Then you will be required to submit documentation that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they agree to cancel.
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.