Eliminating Private Mortgage Insurance
While lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance goes below 78% of the price of purchase, they do not have to cancel automatically if the equity is above 22%. (There are exceptions -like a number of "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed past July '99), no matter the original purchase price, after the equity reaches twenty percent.
Do your homework
Keep track of each principal payment. Pay attention to the prices of other houses in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you likely haven't been able to pay very much of the principal: you have been paying mostly interest.
Proof of Equity
You can start the process of canceling PMI when you're sure your equity has reached 20%. You will need to contact your lender to let them know that you wish to cancel PMI. Then you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lenders will require one before they agree to cancel.
At Tier One Mortgage, LLC, we answer questions about PMI every day. Give us a call at (585) 282-0960.