While lenders have been obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) But if your equity reaches 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage loan closed after July 1999).
Keep a running total of each principal payment. Also keep track of how much other homes are being sold for in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't lowered much.
At the point you determine you have achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lending institutions ask for proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request 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.