While lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance gets below 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (Certain "higher risk" loan programs are not included.) But if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel your PMI (for a loan closed after July 1999).
Keep a running total of each principal payment. Make yourself aware of the purchase prices of other homes in your neighborhood. Unfortunately, if you have a new loan - five years or under, you probably haven't been able to pay much of the principal: you are paying mostly interest.
You can begin the process of PMI cancelation at the time you're sure your equity reaches 20%. You will need to call your lending institution to let them know that you wish to cancel PMI. Your lender will ask for proof 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 require one before they agree to cancel PMI.
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