Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) goes below seventy-eight percent of the price of purchase, but not when the borrower's equity reaches more than twenty-two percent. (There are some loans that are not included -like a number of "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgages closed after July 1999) at the point your equity gets to 20 percent, without consideration of the original purchase price.
Keep a record of payments
Familiarize yourself with your loan statements to keep track of principal payments. Also keep track of the price that other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't had a chance to pay a lot of the principal: you have been paying mostly interest.
Proof of Equity
At the point your equity has risen to the magic number of twenty percent, you are not far away from stopping your PMI payments, once and for all. Contact the lending institution to request cancellation of PMI. Next, you will be required to verify that you are eligible to cancel. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Iltis Lending Group can answer questions about PMI and many others. Give us a call: (941) 954-4252.