For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (Certain "higher risk" loan programs are not included.) But you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity reaches 20 percent, no matter the original price of purchase.
Analyze your loan statements often. You'll want to stay aware of the the purchase amounts of the homes that sell around you. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
When you determine you have reached 20 percent equity, you can begin the process of getting PMI out of your budget. First you will notify your lender that you are requesting to cancel PMI. Then you will be required to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lenders 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.