Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of that year) goes beneath seventy-eight percent of the purchase price, but not when the loan's equity climbs to twenty-two percent or higher. (A number of "higher risk" loans are not included.) But you are able to cancel PMI yourself (for mortgages made after July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.
Familiarize yourself with your loan statements to keep track of principal payments. You'll want to keep track of the the purchase amounts of the houses that are selling around you. Unfortunately, if you have a recent loan - five years or under, you probably haven't been able to pay much of the principal: you have been paying mostly interest.
At the point your equity has reached the required twenty percent, you are just a few steps away from canceling your PMI payments, for the life of your loan. Call your lender to ask for cancellation of PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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