Make Private Mortgage Insurance a Thing of the Past
While lenders have been obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the borrower’s equity is above 22%. (Certain “higher risk” mortgage loans are excluded.) But if your equity rises to 20% (no matter what the original price was), you can cancel the PMI (for a mortgage loan that after July 1999).
Verify the numbers
Keep track of money going toward the principal. You’ll want to stay aware of the prices of the homes that are selling around you. If your loan is fewer than five years old, it’s likely you haven’t paid down much principal – it’s been mostly interest.
Proof of Equity
At the point your equity has risen to the desired twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. Call your mortgage lender to ask for cancellation of PMI. Next, you will be required to verify that you are eligible to cancel. 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 lending institutions before canceling PMI.
