Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to twenty-two percent or higher. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing past July '99), without considering the original price of purchase, at the point the equity reaches twenty percent.
Keep a running total of each principal payment. You'll want to be aware of the the purchase prices of the houses that are selling in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.
You can begin the process of PMI cancelation as soon as you're sure your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. The lending institution will request proof that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and almost all lending institutions 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.