Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed after July of '99) goes down below seventy-eight percent of the price of purchase, but not when the loan's equity climbs to twenty-two percent or higher. (This legal requirment does not include some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), regardless of the original purchase price, after the equity reaches twenty percent.
Do your homework
Keep a running total of each principal payment. You'll want to be aware of the prices of the homes that are selling in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't greatly reduced principal � you have paid mostly interest.
Proof of Equity
Once you find you have achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Contact the lender to ask for cancellation of PMI. Your lender will ask for proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel.
Iltis Lending Group can help find out if you can eliminate your PMI. Give us a call: (941) 954-4252.