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Equity Percentage Formula:
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The Home Equity Calculator for PMI calculates your equity percentage to determine when you can cancel Private Mortgage Insurance (PMI). PMI is typically required when your down payment is less than 20% and can be canceled once you reach 20% equity.
The calculator uses the equity percentage formula:
Where:
Explanation: The formula calculates what percentage of your home's value you actually own versus what you still owe on your mortgage.
Details: Knowing your equity percentage is crucial for PMI cancellation, refinancing decisions, home equity loans, and understanding your overall financial position as a homeowner.
Tips: Enter your home's current market value and your remaining mortgage balance. Use accurate, up-to-date values for the most precise calculation. PMI cancellation typically requires 20% equity.
Q1: What is PMI and when is it required?
A: Private Mortgage Insurance is required when your down payment is less than 20% of the home's purchase price. It protects the lender if you default on the loan.
Q2: How do I get PMI removed?
A: PMI can be automatically removed when you reach 22% equity based on the original amortization schedule, or you can request cancellation at 20% equity with a current appraisal.
Q3: Does home appreciation count toward equity?
A: Yes, both paying down your mortgage and home value appreciation contribute to building equity that can help you reach the 20% threshold.
Q4: What if my equity is exactly 20%?
A: Most lenders allow you to request PMI cancellation once you reach 20% equity, though you may need to provide a current appraisal to confirm the home's value.
Q5: Are there other ways to remove PMI?
A: Yes, through refinancing, making additional principal payments, or home improvements that significantly increase your property value.