For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (The legal requirment does not cover a number of higher risk mortgages.) But you can actually cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.
Verify the numbers
Study your statements often. Also stay aware of what other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or fewer, you likely haven't been able to pay very much of the principal: you are paying mostly interest.
Proof of Equity
You can begin the process of canceling your PMI as soon as you you think that your equity reaches 20%. You will need to contact your lender to let them know that you want to cancel PMI. Then you will be required to verify that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lenders require one before they'll cancel PMI.
Alternative Mortgage Group can answer questions about PMI and many others. Call us at 561-395-4264.