Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of '99) goes below seventy-eight percent of the price of purchase, but not when the loan's equity climbs to higher than twenty-two percent. (There are some loans that are excluded -like a number of "high risk' loans.) But you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity rises to 20 percent, no matter the original price of purchase.
Keep track of your principal payments. You'll want to be aware of the the purchase amounts of the homes that sell in your neighborhood. If your mortgage is fewer than five years old, probably you haven't greatly reduced principal � you have paid mostly interest.
At the point you determine you have reached 20 percent equity, you can start the process of freeing yourself from PMI payments. You will need to contact the lending institution to let them know that you want to cancel PMI payments. Next, you will be required to submit documentation that you are eligible to cancel. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling 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.