Although lenders have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a mortgage closing past July '99), without considering the original purchase price, once the equity climbs to twenty percent.
Do your homework
Review your statements often. Pay attention to the prices of other houses in your immediate area. If your loan is under five years old, chances are you haven't paid down much principal � you have been paying mostly interest.
Proof of Equity
At the point your equity has reached the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will first tell your lender that you are requesting to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel PMI.
Ward Kilduff Mortgage can answer questions about PMI and many others. Call us: (860) 658-7100.
Got a Question?
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.