Canceling Private Mortgage Insurance
Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of '99) goes under seventy-eight percent of the purchase price, but not at the time the loan's equity climbs to over twenty-two percent. (There are some loans that are excluded -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed after July '99), regardless of the original purchase price, after the equity climbs to twenty percent.
Do your homework
Keep a running total of your principal payments. Also stay aware of how much other homes are selling for in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.
You can begin the process of canceling PMI at the time you're sure your equity has reached 20%. Call the lender to request cancellation of your Private Mortgage Insurance. Your lender will require proof that your equity is at 20 percent or above. You can get proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
At Carter Financial Solutions, we answer questions about PMI every day. Call us at 866-840-8745 x2.