Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to over twenty-two percent. (A number of "higher risk" morgages are excluded.) But you have the right to cancel PMI yourself (for loans made past July 1999) when your equity gets to 20 percent, regardless of the original price of purchase.
Familiarize yourself with your monthly statements to keep a running total of principal payments. Find out the purchase prices of other houses in your neighborhood. Unfortunately, if you have a recent loan - five years or fewer, you probably haven't started to pay very much of the principal: you are paying mostly interest.
At the point you determine you've reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you wish to cancel PMI payments. Then you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lending institutions will require one before they agree to cancel PMI.
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