While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the price of purchase, they do not have to take similar action if the loan's equity is over 22%. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity rises to 20 percent, regardless of the original purchase price.
Familiarize yourself with your loan statements to keep a running total of principal payments. Also stay aware of how much other homes are being sold for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't started to pay much of the principal: you have been paying mostly interest.
Once your equity has risen to the desired twenty percent, you are close to getting rid of your PMI payments, once and for all. Call your lending institution to ask for cancellation of your Private Mortgage Insurance. Lenders request documentation verifying your eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your 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.