Although lenders have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance dips under 78% of the price of purchase, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (A number of "higher risk" loan programs are not included.) But you are able to cancel PMI yourself (for mortgage loans closed after July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.
Review your mortgage statements often. You'll want to stay aware of the prices of the homes that sell around you. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't lowered much.
Once you think you've reached 20 percent equity, you can begin the process of getting PMI out of your budget. Contact the mortgage lender to request cancellation of your Private Mortgage Insurance. Then you will be required to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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