Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity reaches twenty-two percent or more. (There are exceptions -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a loan closing past July '99), no matter the original price of purchase, after the equity rises to twenty percent.
Keep track of money going toward the principal. You'll want to stay aware of the prices of the houses that are selling around you. Unfortunately, if yours is a new mortgage - five years or under, 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 required twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. First you will tell your lender that you are asking to cancel PMI. Lending institutions require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions request one before they agree to cancel.
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