While lending institutions have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance goes below 78% of the price of purchase, they do not have to cancel automatically if the equity is above 22%. (Certain "higher risk" mortgage loans are not included.) But you have the right to cancel PMI yourself (for mortgages closed past July 1999) when your equity reaches 20 percent, regardless of the original purchase price.
Keep a running total of payments
Familiarize yourself with your loan statements to keep a running total of principal payments. Also be aware of the price that other homes are purchased for in your neighborhood. If your mortgage is under five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
Verify Equity Amount
You can start the process of PMI cancelation when you calculate that your equity has risen to 20%. Contact your lender to request cancellation of your Private Mortgage Insurance. Your lender will require documentation that your equity is at 20 percent or above. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
Crown Mortgage can answer questions about PMI and many others. Call us at (434) 975-5626.
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.