Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of '99) goes down below seventy-eight percent of the price of purchase, but not at the time the loan's equity reaches twenty-two percent or more. (There are some loans that are not included -like certain "high risk' loans.) But you have the right to cancel PMI yourself (for loans closed after July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.
Verify the numbers
Analyze your loan statements often. Also be aware of how much other homes are selling for in your neighborhood. Unfortunately, if you have a recent mortgage - five years or under, you likely haven't had a chance to pay a lot of the principal: you are paying mostly interest.
The Proof is in the Appraisal
When you determine you have achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to contact your mortgage lender to let them know that you want to cancel PMI. Your lender will ask for documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org) can answer questions about PMI and many others. Give us a call at 214-300-8756.