Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed after July of that year) goes below seventy-eight percent of the purchase price, but not at the time the loan's equity reaches over twenty-two percent. (Certain "higher risk" morgages are excluded.) However, if your equity rises to 20% (regardless of the original purchase price), you have the right to cancel PMI (for a mortgage loan closed past July 1999).
Review your statements often. Find out the prices of other houses in your neighborhood. Unfortunately, if you have a recent mortgage - five years or under, you likely haven't begun to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling your PMI when you're sure your equity has risen to 20%. Call the mortgage lender to request cancellation of PMI. Then you will be asked to submit proof that you are eligible to cancel. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
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