For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (This legal obligation does not include certain higher risk mortgages.) However, if your equity rises to 20% (regardless of the original price of purchase), you can cancel your PMI (for a mortgage loan closed past July 1999).
Keep track of payments
Review your statements often. Find out the prices of other houses in your immediate area. You are paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't gone down much.
Proof of Equity
At the point your equity has risen to the magic number of twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. Call the lender to request cancellation of your Private Mortgage Insurance. Lenders require paperwork verifying your eligibility at this point. 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 request one before they agree to cancel.
At Iltis Lending Group, we answer questions about PMI every day. Call us at (941) 954-4252.