While lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance dips below 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (Certain "higher risk" loans are not included.) The good news is that you can cancel your PMI yourself (for a loan that closed past July '99), without considering the original price of purchase, at the point the equity rises to twenty percent.
Keep a running total of money going toward the principal. You'll want to keep track of the the purchase amounts of the homes that sell around you. If your mortgage is fewer than five years old, chances are you haven't paid down much principal � you have been paying mostly interest.
Once your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. Call your lender to ask for cancellation of PMI. Then you will be required to submit documentation that you have at least 20 percent equity. You can acquire proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders 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.