Eliminating Private Mortgage Insurance
While lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is more than 22%. (The legal requirment does not include some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan closing past July '99), no matter the original purchase price, at the point the equity climbs to twenty percent.
Keep track of payments
Review your statements often. Pay attention to the selling prices of other houses in your immediate area. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
Verify Equity Amount
You can begin the process of PMI cancelation as soon as you're sure your equity reaches 20%. You will need to notify your mortgage lender that you want to cancel PMI. Lenders require proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
At One Source Lending 303-220-7500, we answer questions about PMI every day. Call us: 303-220-7500.