Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of that year) goes beneath seventy-eight percent of the price of purchase, but not at the point the borrower's equity gets to twenty-two percent or higher. (A number of "higher risk" mortgage loans are excluded.) But if your equity reaches 20% (no matter what the original price was), you have the right to cancel your PMI (for a loan that past July 1999).
Analyze your statements often. Also keep track of how much other homes are being sold for in your neighborhood. If your mortgage is under five years old, it's likely you haven't greatly reduced principal � you have been paying mostly interest.
You can begin the process of PMI cancelation when you you think that your equity has reached 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. The lending institution will require documentation that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and almost all lenders 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.