Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of that year) goes under seventy-eight percent of the price of purchase, but not when the loan's equity climbs to more than twenty-two percent. (Some "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), no matter the original price of purchase, once the equity rises to twenty percent.
Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to be aware of the the purchase amounts of the homes that sell around you. If your mortgage is fewer than five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.
At the point you find you've reached 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. You will first notify your lender that you are requesting to cancel PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they'll cancel 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.