While lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the equity is more than 22%. (This legal obligation does not cover certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed past July '99), no matter the original purchase price, after your equity reaches twenty percent.
Do your homework
Review your statements often. Pay attention to the prices of other homes in your neighborhood. If your loan is under five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Proof of Equity
As soon as your equity has reached the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI payments. Next, you will be asked to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
Alternative Mortgage Group can help find out if you can eliminate your PMI. Call us: 561-395-4264.