Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) goes beneath seventy-eight percent of the purchase price, but not when the borrower's equity reaches twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for a loan closing past July '99), without considering the original price of purchase, once the equity gets to twenty percent.
Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to stay aware of the prices of the homes that sell in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
As soon as your equity has risen to the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. You will first let your lending institution know that you are asking to cancel your PMI. Lenders require proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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