Goodbye, PMI!
While lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is above 22%. (There are some exceptions -like some "high risk' loans.) But if your equity reaches 20% (regardless of the original purchase price), you have the legal right to cancel your PMI (for a loan that after July 1999).
Keep track of payments
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Pay attention to the purchase prices of other homes in your immediate area. Unfortunately, if yours is a new loan - five years or fewer, you probably haven't started to pay very much of the principal: you have been paying mostly interest.
The Proof is in the Appraisal
You can begin the process of canceling your PMI as soon as you determine your equity reaches 20%. You will first let your lending institution know that you are asking to cancel PMI. The lending institution will request proof that your equity is at 20 percent or above. 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 F&T Mortgage, Inc. NMLS # 168839 (www.nmlsconsumeraccess.org), we answer questions about PMI every day. Call us at 214-300-8756.