Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of '99) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or more. (This legal requirment does not cover some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your mortgage that closed after July '99), no matter the original price of purchase, at the point your equity reaches twenty percent.
Study your monthly statements often. Find out the prices of other homes in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
As soon as your equity has reached the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. Call the lender to ask for cancellation of your Private Mortgage Insurance. Your lender will request documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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