Although lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (Certain "higher risk" morgages are not included.) But you are able to cancel PMI yourself (for mortgage loans closed past July 1999) when your equity rises to 20 percent, regardless of the original price of purchase.
Keep a record of payments
Familiarize yourself with your monthly statements to keep track of principal payments. You'll want to keep track of the prices of the houses that are selling in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't gone down much.
Proof of Equity
At the point your equity has reached the desired twenty percent, you are close to stopping your PMI payments, once and for all. Contact the lending institution to ask for cancellation of your Private Mortgage Insurance. Your lender will ask for proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and almost all lending institutions will require one before they agree to cancel PMI.
America's Money Source can answer questions about PMI and many others. Give us a call at 4078987559.