While lending institutions have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is more than 22%. (This legal requirment does not cover certain higher risk mortgages.) However, you have the right to cancel PMI yourself (for mortgages closed after July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to be aware of the the purchase amounts of the homes that sell in your neighborhood. If your loan is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.
You can begin the process of PMI cancelation at the time you're sure your equity has risen to 20%. Contact your mortgage lender to request cancellation of your Private Mortgage Insurance. Then you will be asked to verify that you have at least 20 percent equity. You can get documentation of your home's equity by getting a state certified appraisal on 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.