Since 1999, lenders 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 '99) goes beneath seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (There are some exceptions -like certain "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing after July '99), without considering the original price of purchase, when the equity gets to twenty percent.
Review your statements often. Find out the purchase prices of other houses in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.
You can begin the process of canceling PMI at the time you you think that your equity reaches 20%. Contact your mortgage lender to ask for cancellation of your Private Mortgage Insurance. Your lender will ask for documentation that your equity is high enough. Usually lenders ask for 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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