Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity gets to more than twenty-two percent. (There are some exceptions -like a number of "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing past July '99), regardless of the original price of purchase, at the point your equity climbs to twenty percent.
Keep track of each principal payment. You'll want to stay aware of the prices of the houses that sell in your neighborhood. Unfortunately, if you have a recent mortgage - five years or under, you likely haven't had a chance to pay much of the principal: you have been paying mostly interest.
You can start the process of canceling your PMI as soon as you're sure your equity has reached 20%. First you will notify your lender that you are asking to cancel PMI. Lenders request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before 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.