For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for mortgage loans made past July 1999) at the point your equity rises to 20 percent, regardless of the original price of purchase.
Keep track of money going toward the principal. Also keep track of what other homes are purchased for in your neighborhood. Unfortunately, if yours is a new loan - five years or fewer, you probably haven't begun to pay much of the principal: you are paying mostly interest.
Once your equity has reached the desired twenty percent, you are close to canceling your PMI payments, once and for all. Call the mortgage lender to request cancellation of PMI. Lenders require proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), 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.