Canceling Private Mortgage Insurance
Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity reaches twenty-two percent or higher. (There are some exceptions -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for mortgages made past July 1999) at the point your equity rises to 20 percent, no matter the original price of purchase.
Keep a running total of payments
Familiarize yourself with your loan statements to keep track of principal payments. Also keep track of how much other homes are selling for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you likely haven't started to pay very much of the principal: you have been paying mostly interest.
Proof of Equity
Once your equity has reached the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will need to call the lending institution to let them know that you wish to cancel PMI payments. Lending institutions request proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lending institutions require one before they'll cancel PMI.
Tier One Mortgage, LLC can answer questions about PMI and many others. Give us a call: (585) 282-0960.