While lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance dips below 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is above 22%. (There are some loans that are not covered by this law -like a number of "high risk' loans.) But you are able to cancel PMI yourself (for mortgages closed after July 1999) at the point your equity reaches 20 percent, regardless of the original purchase price.
Keep a running total of each principal payment. You'll want to stay aware of the the purchase prices of the houses that are selling around you. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
You can begin the process of PMI cancelation at the time you you think that your equity has reached 20%. First you will let your lending institution know that you are requesting to cancel PMI. Then you will be required to verify that you have at least 20 percent equity. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
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