Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) goes beneath seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or more. (There are some loans that are not covered by this law -like some "high risk' loans.) But if your equity reaches 20% (regardless of the original price of purchase), you have the right to cancel the PMI (for a loan closed after July 1999).
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to be aware of the the purchase prices of the houses that are selling 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.
As soon as your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, once and for all. Call the lender to request cancellation of your PMI. Lending institutions ask for proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel PMI.
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