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Although lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is above 22%. (Some "higher risk" mortgages are excluded.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), no matter the original purchase price, when your equity rises to twenty percent.
Do your homework
Analyze your mortgage statements often. You'll want to stay aware of the the purchase prices of the homes that sell in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you probably haven't started to pay very much of the principal: you are paying mostly interest.
Verify Eligibility
You can start the process of PMI cancellation at the time you're sure your equity reaches 20%. Call the lender to request cancellation of your Private Mortgage Insurance. Lenders require proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
Stonebriar Mortgage can help find out if you can eliminate your PMI. Give us a call: (214) 669-3307.
