Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of that year) goes beneath seventy-eight percent of the purchase price, but not when the borrower's equity reaches higher than twenty-two percent. (Some "higher risk" loan programs are excluded.) But if your equity gets to 20% (no matter what the original price was), you have the right to cancel PMI (for a mortgage that after July 1999).
Review your statements often. Also keep track of what other homes are purchased for in your neighborhood. If your mortgage is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.
As soon as your equity has reached the desired twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. First you will let your lender know that you are asking to cancel your PMI. Lenders ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
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