Although lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance dips under 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (The law does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a loan closing past July '99), no matter the original price of purchase, when the equity reaches twenty percent.
Keep track of your principal payments. Find out the selling prices of other houses in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.
You can begin the process of PMI cancelation when you're sure your equity has reached 20%. You will first let your lender know that you are requesting to cancel PMI. Then you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lending institutions will require one before they agree to cancel.
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