For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (There are exceptions -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for your loan closing past July '99), regardless of the original price of purchase, after your equity rises to twenty percent.
Study your mortgage statements often. You'll want to stay aware of the the purchase prices of the houses that are selling in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
As soon as your equity has risen to the desired twenty percent, you are close to canceling your PMI payments, once and for all. You will need to call the lending institution to alert them that you want to cancel PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal using 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.