Canceling Private Mortgage Insurance
Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or more. (There are some exceptions -like some "high risk' loans.) But if your equity reaches 20% (regardless of the original price of purchase), you can cancel the PMI (for a loan closed after July 1999).
Verify the numbers
Familiarize yourself with your loan statements to keep a running total of principal payments. You'll want to be aware of the prices of the houses that are selling in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
Proof of Equity
When you find you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. First you will notify your lender that you are asking to cancel PMI. The lending institution will require proof that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for 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. Give us a call at 214-663-5355.