For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls under 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel your PMI (for a mortgage loan closed after July 1999).
Study your statements often. Also stay aware of the price that other homes are selling for in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
When you determine you've reached 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. Call your lender to request cancellation of your PMI. Lenders ask for proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
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