Although lending institutions have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (Some "higher risk" morgages are not included.) But if your equity gets to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a loan closed after July 1999).
Study your loan statements often. Also keep track of what other homes are purchased for in your neighborhood. If your mortgage is under five years old, chances are you haven't paid down much principal � it's been mostly interest.
When you find you've achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. Contact your lending institution to ask for cancellation of your Private Mortgage Insurance. Your lender will require documentation that your equity is high enough. Most lenders ask for 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.