Eliminating Private Mortgage Insurance
While lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance goes under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (There are exceptions -like a number of "high risk' loans.) However, you can actually cancel PMI yourself (for mortgages closed after July 1999) when your equity reaches 20 percent, no matter the original price of purchase.
Verify the numbers
Keep track of money going toward the principal. Also stay aware of what other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't started to pay very much of the principal: you are paying mostly interest.
Verify Equity Amount
At the point your equity has risen to the magic number of twenty percent, you are not far away from stopping your PMI payments, once and for all. Contact your lender to ask for cancellation of 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 document your equity amount � and your lender will probably require one before they agree to cancel.
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 at 2146635355.