Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or higher. (There are exceptions -like some loans considered 'high risk'.) But if your equity rises to 20% (regardless of the original purchase price), you can cancel PMI (for a mortgage loan closed past July 1999).
Familiarize yourself with your monthly statements to keep a running total of principal payments. Find out the selling prices of other homes in your neighborhood. If your mortgage is under five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Once you find you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. First you will let your lender know that you are asking to cancel PMI. The lending institution will require documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they agree to cancel PMI.
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