For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of the purchase price � but not when the loan reaches 22 percent equity. (This law does not include certain higher risk mortgages.) However, if your equity gets to 20% (no matter what the original price was), you can cancel PMI (for a mortgage loan closed after July 1999).
Study your loan statements often. Also be aware of the price that other homes are selling for in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
At the point your equity has reached the required twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. You will need to call your lending institution to alert them that you want to cancel PMI. Your lender will request proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and almost all lending institutions request 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.