Although lenders have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is above 22%. (Certain "higher risk" loans are not included.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed past July '99), regardless of the original price of purchase, at the point the equity gets to twenty percent.
Keep a running total of each principal payment. Also be aware of what other homes are being sold for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't begun to pay a lot of the principal: you have been paying mostly interest.
You can start the process of canceling your PMI as soon as you're sure your equity has reached 20%. Call your mortgage lender to request cancellation of your Private Mortgage Insurance. The lending institution will require documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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