Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or higher. (The legal obligation does not include certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed after July '99), no matter the original price of purchase, at the point the equity rises to twenty percent.
Review your statements often. You'll want to stay aware of the the purchase prices of the houses that sell in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
At the point your equity has risen to the magic number of twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you wish to cancel PMI. Next, you will be required to submit proof that you have at least 20 percent equity. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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