Although lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78% of the price of purchase, they do not have to take similar action if the loan's equity is more than 22%. (There are some exceptions -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for loans made after July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.
Familiarize yourself with your monthly statements to keep your eye on principal payments. Find out the selling prices of other houses in your neighborhood. 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.
At the point your equity has reached the required twenty percent, you are not far away from getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI payments. The lending institution will request documentation that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's 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.