For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase amount � but not when the borrower achieves 22 percent equity. (There are some exceptions -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for a loan that closed after July '99), regardless of the original purchase price, after the equity reaches twenty percent.
Study your monthly statements often. You'll want to be aware of the the purchase prices of the homes that sell around you. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.
At the point your equity has risen to the desired twenty percent, you are not far away from getting rid of your PMI payments, once and for all. You will need to call the mortgage lender to let them know that you want to cancel PMI. The lending institution will ask for proof that your equity is at 20 percent or above. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
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