While lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance dips under 78% of the price of purchase, they do not have to cancel automatically if the equity is over 22%. (The law does not cover certain higher risk mortgages.) But you are able to cancel PMI yourself (for loans made after July 1999) when your equity reaches 20 percent, without consideration of the original purchase price.
Do your homework
Keep track of each principal payment. Pay attention to the prices of other homes in your immediate area. If your loan is under five years old, probably you haven't greatly reduced principal � you have been paying mostly interest.
The Proof is in the Appraisal
At the point you determine you've reached 20 percent equity, you can begin the process of getting PMI out of your budget. You will need to call your mortgage lender to alert them that you want to cancel PMI payments. Next, you will be required to submit documentation that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
At Iltis Lending Group, we answer questions about PMI every day. Call us: (941) 954-4252.