Although lending institutions have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets under 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (There are some loans that are excluded -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for loans closed after July 1999) when your equity gets to 20 percent, regardless of the original price of purchase.
Study your mortgage statements often. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
You can start the process of canceling your PMI when you're sure your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Next, you will be required to submit documentation that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and most lending institutions require one before they agree to cancel PMI.
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