While lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the balance dips below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is over 22%. (This legal obligation does not apply to certain higher risk mortgages.) But you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity rises to 20 percent, regardless of the original price of purchase.
Keep a running total of your principal payments. Also stay aware of how much other homes are being sold for in your neighborhood. If your loan is fewer than five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.
As soon as your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. Call the mortgage lender to ask for cancellation of PMI. Next, you will be required to submit documentation that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they'll cancel PMI.
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