Although lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance goes under 78% of the purchase price, they do not have to take similar action if the equity is over 22%. (The legal obligation does not apply to some higher risk mortgages.) However, if your equity gets to 20% (regardless of the original purchase price), you are able to cancel PMI (for a mortgage loan that past July 1999).
Review your statements often. You'll want to be aware of the the purchase prices of the homes that sell in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
Once you find you've achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. First you will let your lender know that you are asking to cancel PMI. Your lender will require 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 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.