For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of your purchase amount � but not at the point the loan reaches 22 percent equity. (There are some loans that are excluded -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing after July '99), without considering the original purchase price, once the equity gets to twenty percent.
Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to stay aware of the the purchase prices of the homes that are selling around you. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
As soon as your equity has risen to the required twenty percent, you are not far away from stopping your PMI payments, once and for all. You will need to contact the lending institution to let them know that you wish to cancel PMI. Lenders request documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request one before they agree to cancel PMI.
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