Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or higher. (This legal obligation does not apply to certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan that closed after July '99), no matter the original purchase price, when your equity gets to twenty percent.
Analyze your mortgage statements often. Also keep track of what other homes are purchased for in your neighborhood. Unfortunately, if you have a recent loan - five years or under, you likely haven't been able to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling your PMI when you you think that your equity has risen to 20%. Call your lending institution to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to submit proof 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 PMI cancellation.
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.