Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity gets to more than twenty-two percent. (There are some exceptions -like a number of "high risk' loans.) However, you are able to cancel PMI yourself (for loans closed past July 1999) when your equity reaches 20 percent, regardless of the original purchase price.
Analyze your monthly statements often. Also be aware of what other homes are purchased for in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
Once your equity has risen to the desired twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. First you will tell your lender that you are asking to cancel PMI. Your lender will request 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 home's equity and eligibility for PMI cancellation.
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.