Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is over 22%. (The legal obligation does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed past July '99), without considering the original purchase price, after the equity rises to twenty percent.
Verify the numbers
Keep a running total of your principal payments. Also be aware of what other homes are selling for in your neighborhood. If your loan is under five years old, chances are you haven't greatly reduced principal � you have paid mostly interest.
The Proof is in the Appraisal
As soon as your equity has risen to the required twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions require documentation verifying your eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
U.S.A. Lending, Inc. can help find out if you can eliminate your PMI. Give us a call at 305-967-7200.