For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed past July '99), no matter the original price of purchase, after the equity reaches twenty percent.
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to stay aware of the the purchase amounts of the houses that are selling around you. Unfortunately, if you have a recent mortgage - five years or fewer, you probably haven't begun to pay very much of the principal: you are paying mostly interest.
When you determine you have reached 20 percent equity in your home, you can begin the process of getting PMI out of your budget. Contact your lender to ask for cancellation of your Private Mortgage Insurance. Next, you will be asked to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's 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.