For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) when your equity rises to 20 percent, no matter the original purchase price.
Keep a running total of your principal payments. Find out the selling prices of other homes in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
You can begin the process of PMI cancelation as soon as you're sure your equity reaches 20%. Contact the lender to ask for cancellation of PMI. Lending institutions request proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your 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.