Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity reaches twenty-two percent or higher. (Certain "higher risk" loans are not included.) However, if your equity rises to 20% (no matter what the original price was), you are able to cancel the PMI (for a loan that after July 1999).
Study your mortgage statements often. Also stay aware of how much other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't had a chance to pay very much of the principal: you have been paying mostly interest.
At the point your equity has reached the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI payments. Next, you will be asked to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions will require one before they agree to cancel.
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.