Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed after July of '99) goes under seventy-eight percent of the purchase price, but not when the borrower's equity reaches higher than twenty-two percent. (There are exceptions -like some "high risk' loans.) However, if your equity gets to 20% (no matter what the original price was), you can cancel your PMI (for a mortgage loan that after July 1999).
Keep a running total of your principal payments. Pay attention to the prices of other houses in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
You can begin the process of canceling PMI as soon as you determine your equity reaches 20%. First you will let your lending institution know that you are asking to cancel PMI. The lending institution will require proof that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
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