Although lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is over 22%. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan closing past July '99), no matter the original price of purchase, at the point the equity rises to twenty percent.
Analyze your monthly statements often. Also be aware of the price that other homes are selling for in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or fewer, you likely haven't started to pay much of the principal: you have been paying mostly interest.
Once you find you've achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they agree to cancel 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.