Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of '99) goes down below seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to twenty-two percent or higher. (There are some loans that are excluded -like a number of "high risk' loans.) However, you can actually cancel PMI yourself (for mortgage loans closed after July 1999) at the point your equity rises to 20 percent, without consideration of the original price of purchase.
Keep a running total of money going toward the principal. Also be aware of how much other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you probably haven't had a chance to pay a lot of the principal: you have been paying mostly interest.
As soon as your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will need to contact your lending institution to alert them that you wish to cancel PMI. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions request one before they agree to 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.