While lenders have been obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance gets under 78% of the purchase price, they do not have to take similar action if the borrower's equity is over 22%. (A number of "higher risk" loan programs are not included.) However, you have the right to cancel PMI yourself (for loans closed after July 1999) when your equity reaches 20 percent, without consideration of the original purchase price.
Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
You can begin the process of canceling your PMI at the time you you think that your equity has risen to 20%. You will need to contact your lending institution to alert them that you want to cancel PMI. Your lender will request documentation that your equity is at 20 percent or above. 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.