Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity gets to twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for loans closed after July 1999) once your equity gets to 20 percent, without consideration of the original price of purchase.
Keep track of each principal payment. You'll want to keep track of the the purchase prices of the houses that sell around you. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't begun to pay much of the principal: you are paying mostly interest.
Once 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. Lenders request documentation verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before 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.