Goodbye, PMI!
Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of '99) goes below seventy-eight percent of the purchase price, but not at the time the loan's equity climbs to twenty-two percent or higher. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage loan closed after July 1999).
Do your homework
Familiarize yourself with your monthly statements to keep a running total of principal payments. Also keep track of the price that other homes are purchased for in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't gone down much.
The Proof is in the Appraisal
At the point your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. You will first notify your lender that you are requesting to cancel PMI. The lending institution will require proof that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lending institutions will 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: 2146635355.