While lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance dips below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is over 22%. (There are some exceptions -like a number of "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgage loans closed past July 1999) once your equity gets to 20 percent, no matter the original purchase price.
Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal � you have been paying mostly interest.
You can start the process of canceling your PMI at the time you're sure your equity reaches 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Lending institutions request paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lending institutions require one before they'll cancel PMI.
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