Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the point the loan's equity gets to twenty-two percent or more. (This legal requirment does not include a number of higher risk mortgages.) But you are able to cancel PMI yourself (for mortgage loans made after July 1999) once your equity rises to 20 percent, without consideration of the original purchase price.
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to be aware of the the purchase prices of the houses that sell in your neighborhood. If your loan is fewer than five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.
You can begin the process of canceling your PMI at the time you determine your equity has risen to 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will require proof that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they'll 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.