While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is above 22%. (Some "higher risk" mortgage loans are not included.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed past July '99), without considering the original price of purchase, when the equity climbs to twenty percent.
Keep track of your principal payments. Also be aware of how much other homes are purchased for in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
Once you find you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Contact your lending institution to request cancellation of PMI. Your lender will request documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.