Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to higher than twenty-two percent. (This law does not cover some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing past July '99), regardless of the original purchase price, once the equity reaches twenty percent.
Keep a record of payments
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to stay aware of the prices of the houses that sell around you. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
Proof of Equity
Once your equity has risen to the required twenty percent, you are close to stopping your PMI payments, once and for all. First you will tell your lender that you are asking to cancel your PMI. The lending institution will request documentation that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and most lenders require one before they'll cancel PMI.
Tier One Mortgage, LLC can help find out if you can eliminate your PMI. Give us a call: (585) 282-0960.