While lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips below 78% of the purchase price, they do not have to cancel automatically if the borrower's equity is more than 22%. (A number of "higher risk" loans are not included.) But you are able to cancel PMI yourself (for mortgage loans made after July 1999) when your equity gets to 20 percent, regardless of the original price of purchase.
Review your statements often. Pay attention to the prices of other houses in your immediate area. Unfortunately, if yours is a new mortgage - five years or fewer, you likely haven't been able to pay a lot of the principal: you have been paying mostly interest.
At the point your equity has reached the magic number of twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. Contact the mortgage lender to ask for cancellation of your Private Mortgage Insurance. The lending institution will ask for documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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