For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for loans made after July 1999) when your equity gets to 20 percent, no matter the original price of purchase.
Verify the numbers
Study your monthly statements often. Also be aware of what other homes are being sold for in your neighborhood. If your mortgage is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.
Proof of Equity
Once your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI payments. Lending institutions require proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
At Hancock Mortgage Partners, LLC NMLS# 229844, we answer questions about PMI every day. Give us a call at 225 819 7670.