Although lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is above 22%. (The legal requirment does not cover certain higher risk mortgages.) But you are able to cancel PMI yourself (for loans closed past July 1999) at the point your equity gets to 20 percent, regardless of the original price of purchase.
Keep track of your principal payments. Also stay aware of how much other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, probably you haven't made much progress with the principal � you have paid mostly interest.
As soon as your equity has reached the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. The lending institution will ask for documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's 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.