While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance gets below 78% of the purchase price, they do not have to cancel automatically if the equity is over 22%. (Certain "higher risk" loans are not included.) But you are able to cancel PMI yourself (for mortgages closed after July 1999) once your equity gets to 20 percent, no matter the original purchase price.
Keep a record of payments
Familiarize yourself with your loan statements to keep a running total of principal payments. Make yourself aware of the prices of other homes in your immediate area. Unfortunately, if you have a new mortgage loan - five years or under, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.
Verify Equity Amount
When you determine you've achieved at least 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. Contact the lender to ask for cancellation of PMI. Next, you will be required to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234 can help find out if you can eliminate your PMI. Call us at 214-663-5355.