For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like certain "high risk' loans.) However, if your equity gets to 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage loan that after July 1999).
Verify the numbers
Keep a running total of money going toward the principal. Also stay aware of how much other homes are selling for in your neighborhood. If your loan is fewer than five years old, probably you haven't paid down much principal � you have been paying mostly interest.
At the point your equity has risen to the required twenty percent, you are not far away from getting rid of your PMI payments, once and for all. Contact the lender to request cancellation of PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel PMI.
At Iltis Lending Group, we answer questions about PMI every day. Call us at (941) 954-4252.