Although lenders have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is more than 22%. (Certain "higher risk" morgages are not included.) But if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel PMI (for a mortgage closed after July 1999).
Analyze your statements often. Find out the prices of other houses in your neighborhood. If your loan is under five years old, probably you haven't greatly reduced principal � it's been mostly interest.
At the point your equity has risen to the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to contact your mortgage lender to let them know that you wish to cancel PMI payments. Lenders ask for paperwork verifying your eligibility at this point. You can acquire proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before 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.