Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of '99) goes below seventy-eight percent of the price of purchase, but not at the point the loan's equity climbs to twenty-two percent or higher. (The legal obligation does not apply to a number of higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed after July '99), no matter the original purchase price, when your equity rises to twenty percent.
Keep track of your principal payments. Also stay aware of how much other homes are purchased for in your neighborhood. If your mortgage is under five years old, probably you haven't made much progress with the principal � it's been mostly interest.
At the point you determine you've reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will need to call the lending institution to alert them that you wish to cancel PMI payments. Then you will be asked to submit proof that you have at least 20 percent equity. Usually lenders require 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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