For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of your purchase amount � but not at the point the borrower earns 22 percent equity. (The law 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 mortgage that closed after July '99), no matter the original price of purchase, after the equity reaches twenty percent.
Keep track of each principal payment. You'll want to keep track of the the purchase amounts of the houses that sell around you. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
You can start the process of PMI cancelation at the time you determine your equity has reached 20%. Contact your lending institution to request cancellation of PMI. Lending institutions require paperwork verifying your 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 your lender will probably request one before they agree to cancel.
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