Make Private Mortgage Insurance a Thing of the Past
While lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets below 78% of the purchase price, they do not have to take similar action if the loan's equity is above 22%. (Some "higher risk" mortgage loans are excluded.) But you are able to cancel PMI yourself (for loans closed past July 1999) when your equity reaches 20 percent, without consideration of the original price of purchase.
Verify the numbers
Keep track of your principal payments. You'll want to be aware of the prices of the homes that sell in your neighborhood. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.
The Proof is in the Appraisal
You can start the process of canceling your PMI as soon as you're sure your equity has risen to 20%. Contact your lending institution to ask for cancellation of your PMI. Lenders ask for paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel PMI.
At Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234, we answer questions about PMI every day. Give us a call: 214-663-5355.