Canceling Private Mortgage Insurance
While lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is over 22%. (Certain "higher risk" morgages are excluded.) But if your equity reaches 20% (no matter what the original price was), you have the right to cancel your PMI (for a mortgage that past July 1999).
Verify the numbers
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to keep track of the the purchase prices of the homes that are selling in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't lowered much.
The Proof is in the Appraisal
Once your equity has risen to the required twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI payments. Next, you will be asked to submit proof that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
Tier One Mortgage, LLC can answer questions about PMI and many others. Give us a call: (585) 282-0960.