Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) goes beneath seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to twenty-two percent or more. (Certain "higher risk" morgages are excluded.) However, you can actually cancel PMI yourself (for mortgage loans closed past July 1999) at the point your equity rises to 20 percent, without consideration of the original purchase price.
Familiarize yourself with your loan statements to keep your eye on principal payments. Also be aware of how much other homes are purchased for in your neighborhood. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't been reduced by much.
You can start the process of PMI cancelation at the time you determine your equity has reached 20%. Contact the lending institution to ask for cancellation of your Private Mortgage Insurance. Your lender will ask for proof that your equity is at 20 percent or above. You can acquire proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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