For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of the purchase amount � but not at the point the borrower earns 22 percent equity. (A number of "higher risk" loan programs are not included.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed past July '99), no matter the original purchase price, after the equity rises to twenty percent.
Keep a running total of money going toward the principal. Also keep track of how much other homes are being sold for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
Once you think you've reached 20 percent equity, you can begin the process of getting PMI out of your budget. Call your lending institution to request cancellation of PMI. Then you will be required to submit documentation that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lenders require one before they'll cancel 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.