Make Private Mortgage Insurance a Thing of the Past

Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed past July of that year) goes below seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or higher. (Certain "higher risk" mortgage loans are excluded.) But if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel the PMI (for a mortgage closed past July 1999).

Verify the numbers

Familiarize yourself with your loan statements to keep track of principal payments. Also be aware of what other homes are being sold for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.

Verify Eligibility

You can begin the process of PMI cancellation as soon as you're sure your equity has reached 20%. Contact your lending institution to request cancellation of PMI. The lending institution will ask for documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount - and almost all lending institutions require one before they agree to cancel.