Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of '99) goes beneath seventy-eight percent of the price of purchase, but not at the time the borrower's equity reaches twenty-two percent or higher. (There are some loans that are not included -like a number of "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.
Keep track of your principal payments. You'll want to stay aware of the prices of the houses that are selling around you. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
When you determine you have achieved at least 20 percent equity, you can start the process of getting PMI out of your budget. You will first let your lender know that you are asking to cancel PMI. Your lender will require documentation that your equity is high enough. 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 canceling PMI.
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.