Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed after July of '99) goes beneath seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or more. (A number of "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed after July '99), regardless of the original purchase price, once your equity rises to twenty percent.
Review your loan statements often. Also keep track of what other homes are selling for in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't begun to pay much of the principal: you have been paying mostly interest.
At the point your equity has reached the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, for the life of your loan. Contact your lending institution to ask for cancellation of your Private Mortgage Insurance. Lenders require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lending institutions will require one before they agree to cancel.
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