Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the time the loan's equity gets to twenty-two percent or higher. (A number of "higher risk" morgages are excluded.) But if your equity gets to 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage that past July 1999).
Do your homework
Keep track of your principal payments. Also stay aware of the price that other homes are being sold for in your neighborhood. If your mortgage is fewer than five years old, probably you haven't greatly reduced principal � it's been mostly interest.
Once you think you have achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. Contact your lending institution to ask for cancellation of your PMI. Next, you will be asked to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
At Tier One Mortgage, LLC, we answer questions about PMI every day. Give us a call: (585) 282-0960.