Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity climbs to over twenty-two percent. (There are some loans that are not included -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed after July '99), no matter the original price of purchase, when the equity climbs to twenty percent.
Familiarize yourself with your monthly statements to keep track of principal payments. Also keep track of what other homes are selling for in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or fewer, you probably haven't started to pay a lot of the principal: you are paying mostly interest.
As soon as your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact your mortgage lender to ask for cancellation of your PMI. Then you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions request one before they'll cancel PMI.
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