For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of the purchase amount � but not at the point the borrower achieves 22 percent equity. (There are some loans that are excluded -like certain "high risk' loans.) However, if your equity rises to 20% (regardless of the original purchase price), you have the legal right to cancel the PMI (for a mortgage closed past July 1999).
Review your statements often. Find out the purchase prices of other houses in your immediate area. If your mortgage is under five years old, chances are you haven't greatly reduced principal � you have paid mostly interest.
Once you determine you have achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. First you will let your lender know that you are asking to cancel PMI. Your lender will request documentation that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lending institutions will require one before they'll 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.