For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (There are exceptions -like a number of "high risk' loans.) But if your equity gets to 20% (no matter what the original purchase price was), you can cancel the PMI (for a mortgage loan that past July 1999).
Analyze your statements often. You'll want to stay aware of the the purchase prices of the homes that sell around you. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
At the point you think you've achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. Call your lender to ask for cancellation of your PMI. Your lender will request proof that your equity is at 20 percent or above. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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