Since 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) goes below seventy-eight percent of the purchase price, but not at the point the borrower's equity reaches twenty-two percent or higher. (Certain "higher risk" loan programs are excluded.) However, if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel PMI (for a mortgage loan that after July 1999).
Keep a running total of each principal payment. Make yourself aware of the selling prices of other homes in your immediate area. Unfortunately, if yours is a new mortgage loan - five years or under, you likely haven't been able to pay very much of the principal: you have been paying mostly interest.
When you find you have achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. First you will tell your lender that you are asking to cancel PMI. Your lender will ask for proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably require one before they agree to cancel.
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