For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (A number of "higher risk" loans are excluded.) However, if your equity rises to 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage that past July 1999).
Study your monthly statements often. Find out the selling prices of other houses in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't had a chance to pay much of the principal: you have been paying mostly interest.
As soon as your equity has risen to the required twenty percent, you are not far away from canceling your PMI payments, once and for all. You will first tell your lender that you are requesting to cancel PMI. Your lender will require proof that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request one before they agree to cancel 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.