For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (The law does not include some higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgage loans closed after July 1999) at the point your equity reaches 20 percent, regardless of the original price of purchase.
Study your monthly statements often. You'll want to be aware of the the purchase prices of the houses that are selling in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
Once 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. First you will let your lender know that you are requesting to cancel PMI. Then you will be required to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.