For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (A number of "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for your loan closing after July '99), no matter the original purchase price, after the equity rises to twenty percent.
Keep a running total of money going toward the principal. Find out the prices of other homes in your neighborhood. If your loan is fewer than five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.
You can start the process of canceling PMI at the time you're sure your equity has reached 20%. You will need to call the mortgage lender to let them know that you wish to cancel PMI payments. Your lender will request documentation 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 most lenders 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.