While lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to cancel automatically if the equity is more than 22%. (The legal requirment does not cover certain higher risk mortgages.) But if your equity reaches 20% (no matter what the original purchase price was), you can cancel the PMI (for a mortgage that after July 1999).
Keep track of your principal payments. You'll want to be aware of the prices of the homes that are selling in your neighborhood. If your loan is under five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.
At the point you find you've achieved at least 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will ask for proof 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 home's equity and eligibility for PMI cancellation.
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.