Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of '99) goes below seventy-eight percent of the purchase price, but not when the borrower's equity climbs to twenty-two percent or more. (Some "higher risk" morgages are excluded.) However, if your equity gets to 20% (regardless of the original price of purchase), you can cancel your PMI (for a mortgage loan closed past July 1999).
Keep track of each principal payment. You'll want to stay aware of the the purchase amounts of the houses that sell around you. If your loan is fewer than five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.
As soon as your equity has reached the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to contact the mortgage lender to alert them that you wish to cancel PMI. Lending institutions require documentation verifying your eligibility at this point. 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.
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.