For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of your purchase amount ? but not when the loan reaches 22 percent equity. (There are some exceptions -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage that closed past July '99), no matter the original price of purchase, after your equity reaches twenty percent.
Review your statements often. Find out the purchase prices of other homes in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't lowered much.
You can begin the process of canceling your PMI when you you think that your equity has risen to 20%. You will need to contact the lender to let them know that you wish to cancel PMI. Lending institutions request proof of eligibility at this point. You can get documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.