Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of '99) goes under seventy-eight percent of the price of purchase, but not at the point the borrower's equity reaches twenty-two percent or more. (This law does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed past July '99), without considering the original price of purchase, after your equity reaches twenty percent.
Familiarize yourself with your monthly statements to keep a running total of principal payments. Find out the selling prices of other houses in your neighborhood. If your loan is fewer than five years old, probably you haven't greatly reduced principal � you have been paying mostly interest.
Once your equity has reached the desired twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. You will first notify your lender that you are requesting to cancel PMI. The lending institution will require proof 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 require one before they agree to 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.