While lenders have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the balance dips below 78% of the purchase price, they do not have to cancel automatically if the equity is above 22%. (This legal requirment does not apply to some higher risk mortgages.) But you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity gets to 20 percent, without consideration of the original purchase price.
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Find out the selling prices of other houses in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
Once you think you've achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Contact your mortgage lender to ask for cancellation of 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 verify your equity and eligibility for PMI cancellation.
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