Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of '99) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to twenty-two percent or more. (There are exceptions -like some "high risk' loans.) But you can actually cancel PMI yourself (for mortgage loans made after July 1999) once your equity reaches 20 percent, regardless of the original price of purchase.
Keep a running total of your principal payments. Find out the purchase prices of other houses in your neighborhood. Unfortunately, if you have a new loan - five years or fewer, you probably haven't started to pay a lot of the principal: you have been paying mostly interest.
You can begin the process of PMI cancelation as soon as you're sure your equity has risen to 20%. You will first let your lender know that you are asking to cancel PMI. Lenders ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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