Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of '99) goes down below seventy-eight percent of the purchase price, but not when the borrower's equity climbs to twenty-two percent or higher. (There are some loans that are excluded -like some loans considered 'high risk'.) However, you can actually cancel PMI yourself (for loans made past July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.
Keep a running total of money going toward the principal. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't begun to pay a lot of the principal: you have been paying mostly interest.
You can begin the process of PMI cancelation at the time you're sure your equity reaches 20%. Contact the mortgage lender to ask for cancellation of PMI. Then you will be asked to submit proof that you are eligible to cancel. Most lenders ask for 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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