Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of that year) goes below seventy-eight percent of the purchase price, but not when the loan's equity gets to higher than twenty-two percent. (There are some exceptions -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage closing past July '99), regardless of the original purchase price, when the equity rises to twenty percent.
Analyze your monthly statements often. Also be aware of what other homes are being sold for in your neighborhood. If your loan is fewer than five years old, probably you haven't paid down much principal � you have been paying mostly interest.
You can start the process of canceling your PMI as soon as you're sure your equity has risen to 20%. Contact the lending institution to request cancellation of your PMI. Lending institutions request documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they'll cancel PMI.
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