Make Private Mortgage Insurance a Thing of the Past
Although lenders have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (Certain "higher risk" morgages are excluded.) But you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity gets to 20 percent, without consideration of the original price of purchase.
Verify the numbers
Keep track of your principal payments. You'll want to be aware of the prices of the homes that sell in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.
Verify Equity Amount
You can start the process of canceling PMI at the time you're sure your equity has reached 20%. Contact your lender to ask for cancellation of PMI. Your lender will request proof that your equity is at 20 percent or above. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
At Alternative Mortgage Group, we answer questions about PMI every day. Call us at 561-395-4264.