Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches more than twenty-two percent. (This legal obligation does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage closing past July '99), without considering the original purchase price, after your equity rises to twenty percent.
Study your loan statements often. You'll want to keep track of the the purchase amounts of the homes that are selling around you. Unfortunately, if yours is a new loan - five years or fewer, you likely haven't started to pay much of the principal: you have been paying mostly interest.
Once your equity has risen to the magic number of twenty percent, you are close to canceling your PMI payments, once and for all. Contact your lender to request cancellation of your Private Mortgage Insurance. Lending institutions request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and almost all lenders will require one before they agree to cancel.
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