Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of '99) goes down below seventy-eight percent of the purchase price, but not when the loan's equity climbs to twenty-two percent or higher. (This legal requirment does not apply to some higher risk mortgages.) However, you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity rises to 20 percent, without consideration of the original price of purchase.
Study your monthly statements often. Also be aware of what other homes are purchased for in your neighborhood. If your loan is fewer than five years old, it's likely you haven't paid down much principal � it's been mostly interest.
You can start the process of canceling your PMI when you're sure your equity has reached 20%. Call your lending institution to ask for cancellation of your PMI. Your lender will request documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request 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.