Although lenders have been obligated (for loans closed past July ’99) to cancel Private Mortgage Insurance (PMI) at the point the balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the loan’s equity is above 22%. (There are some exceptions -like some loans considered ‘high risk’.) But you have the right to cancel PMI yourself (for mortgages made past July 1999) once your equity gets to 20 percent, without consideration of the original price of purchase.
Do your homework
Familiarize yourself with your mortgage statements to keep a running total of principal payments. You’ll want to be aware of the the purchase prices of the homes that sell in your neighborhood. Unfortunately, if you have a new loan – five years or fewer, you likely haven’t been able to pay a lot of the principal: you are paying mostly interest.
Proof of Equity
You can begin the process of PMI cancellation when you calculate that your equity has reached 20%. Contact the mortgage lender to request cancellation of your PMI. Lending institutions require paperwork verifying your eligibility at this point. You can acquire documentation of your home’s equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.