Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches more than twenty-two percent. (The legal obligation does not include certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a loan closing after July '99), without considering the original price of purchase, when your equity reaches twenty percent.
Familiarize yourself with your monthly statements to keep track of principal payments. Also be aware of what other homes are being sold for in your neighborhood. If your loan is fewer than five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
You can begin the process of canceling PMI when you're sure your equity has risen to 20%. You will first let your lending institution know that you are requesting to cancel your PMI. Next, you will be asked to submit documentation that you have at least 20 percent equity. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for 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.