Although lenders have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance dips under 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (A number of "higher risk" loan programs are excluded.) The good news is that you can cancel your PMI yourself (for your loan that closed after July '99), without considering the original price of purchase, after your equity rises to twenty percent.
Familiarize yourself with your monthly statements to keep a running total of principal payments. Pay attention to the selling prices of other homes in your immediate area. If your loan is under five years old, probably you haven't greatly reduced principal � it's been mostly interest.
At the point your equity has reached the desired twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. Call the lender to request cancellation of your PMI. Lenders request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is 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.