For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of your purchase amount � but not at the point the borrower achieves 22 percent equity. (There are some loans that are not included -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a mortgage that closed after July '99), no matter the original purchase price, when the equity rises to twenty percent.
Analyze your statements often. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.
At the point you think you have achieved at least 20 percent equity, you can start the process of getting PMI out of your budget. Call the lender to ask for cancellation of PMI. The lending institution will request documentation that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request one before they agree to cancel PMI.
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