Although lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the purchase price, they do not have to cancel PMI automatically if the equity is more than 22%. (The legal obligation does not apply to certain higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgage loans made after July 1999) once your equity rises to 20 percent, no matter the original price of purchase.
Keep a running total of your principal payments. You'll want to be aware of the the purchase prices of the houses that sell around you. Unfortunately, if you have a recent loan - five years or fewer, you probably haven't begun to pay much of the principal: you are paying mostly interest.
Once you think you have reached 20 percent equity in your home, you can start the process of getting PMI out of your budget. Contact the mortgage lender to ask for cancellation of your PMI. The lending institution will ask for proof that your equity is at 20 percent or above. You can get proof of your equity by getting 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.