Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of '99) goes below seventy-eight percent of the purchase price, but not when the borrower's equity gets to twenty-two percent or more. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed after July '99), without considering the original purchase price, at the point your equity reaches twenty percent.
Familiarize yourself with your monthly statements to keep track of principal payments. Pay attention to the prices of other houses in your neighborhood. If your mortgage is under five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Once you think you have reached 20 percent equity, you can begin the process of getting PMI out of your budget. First you will let your lending institution know that you are requesting to cancel PMI. Lenders ask for documentation verifying your eligibility at this point. 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 lenders 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.