Although lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is above 22%. (There are exceptions -like a number of "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your loan closing after July '99), regardless of the original price of purchase, at the point the equity rises to twenty percent.
Familiarize yourself with your loan statements to keep track of principal payments. Also stay aware of what other homes are selling for in your neighborhood. Unfortunately, if yours is a new loan - five years or under, you probably haven't had a chance to pay much of the principal: you are paying mostly interest.
You can begin the process of canceling PMI as soon as you determine your equity reaches 20%. Call your mortgage lender to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on 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.
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