Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of that year) goes beneath seventy-eight percent of the purchase price, but not at the time the loan's equity reaches over twenty-two percent. (This law does not apply to certain higher risk mortgages.) But if your equity reaches 20% (regardless of the original purchase price), you are able to cancel your PMI (for a mortgage loan closed past July 1999).
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to be aware of the prices of the houses that are selling in your neighborhood. If your loan is fewer than five years old, it's likely you haven't paid down much principal � you have paid mostly interest.
You can start the process of PMI cancelation at the time you determine your equity has risen to 20%. Call the lending institution to request cancellation of your PMI. The lending institution will request documentation that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify 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.