Although lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78% of the purchase price, they do not have to take similar action if the borrower's equity is above 22%. (A number of "higher risk" mortgage loans are excluded.) The good news is that you can cancel your PMI yourself (for your loan closing after July '99), regardless of the original purchase price, at the point the equity climbs to twenty percent.
Study your loan statements often. You'll want to stay aware of the the purchase prices of the homes that are selling around you. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't begun to pay much of the principal: you are paying mostly interest.
As soon as your equity has risen to the required twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. Contact the lender to ask for cancellation of your PMI. Your lender will require documentation that your equity is at 20 percent or above. You can get documentation 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.