While lenders have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is over 22%. (There are some exceptions -like some loans considered 'high risk'.) But if your equity reaches 20% (regardless of the original price of purchase), you can cancel PMI (for a mortgage closed past July 1999).
Study your statements often. Also be aware of what other homes are purchased for in your neighborhood. If your loan is under five years old, probably you haven't greatly reduced principal � it's been mostly interest.
You can start the process of canceling your PMI when you you think that your equity has reached 20%. Call your mortgage lender to ask for cancellation of your Private Mortgage Insurance. Next, you will be required to verify that you are eligible to cancel. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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