Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to over twenty-two percent. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a mortgage loan that closed after July '99), without considering the original price of purchase, when the equity rises to twenty percent.
Keep track of payments
Analyze your loan statements often. Make yourself aware of the prices of other homes in your immediate area. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't lowered much.
Verify Equity Amount
When you find you've achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. First you will let your lending institution know that you are asking to cancel your PMI. Lending institutions ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
At Debbie Oliver NMLS License #248252, America's First Choice Mortgage, NMLS License #279234, we answer questions about PMI every day. Call us: 2146635355.