For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of the purchase amount � but not at the point the borrower achieves 22 percent equity. (This legal requirment does not include a number of higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgages closed past July 1999) once your equity reaches 20 percent, regardless of the original purchase price.
Verify the numbers
Keep a running total of money going toward the principal. You'll want to stay aware of the prices of the homes that sell around you. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't had a chance to pay a lot of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
At the point you determine you have reached 20 percent equity in your home, you can begin the process of getting PMI out of your budget. Contact the lending institution to ask for cancellation of PMI. Lending institutions request paperwork verifying your eligibility at this point. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
Iltis Lending Group can answer questions about PMI and many others. Call us: (941) 954-4252.