Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made past July of '99) goes beneath seventy-eight percent of the price of purchase, but not at the time the loan's equity reaches more than twenty-two percent. (The legal obligation does not apply to some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your loan closing past July '99), regardless of the original price of purchase, after the equity gets to twenty percent.
Review your statements often. Also be aware of how much other homes are being sold for in your neighborhood. If your loan is fewer than five years old, probably you haven't made much progress with the principal � it's been mostly interest.
You can start the process of PMI cancelation at the time you're sure your equity has reached 20%. Call your lending institution to ask for cancellation of your Private Mortgage Insurance. Lenders ask for proof of eligibility at this point. You can get documentation of your home's 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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