Although lenders have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the balance gets under 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is above 22%. (The legal requirment does not include a number of higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed after July '99), without considering the original purchase price, after your equity climbs to twenty percent.
Keep a record of payments
Keep a running total of your principal payments. Also keep track of the price that other homes are purchased for in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or fewer, you probably haven't begun to pay a lot of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
You can start the process of PMI cancelation as soon as you determine your equity has risen to 20%. Contact your mortgage lender to request cancellation of your PMI. Lending institutions ask for proof of eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
At Iltis Lending Group, we answer questions about PMI every day. Give us a call: (941) 954-4252.