For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (There are exceptions -like a number of "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), without considering the original price of purchase, at the point the equity climbs to twenty percent.
Study your loan statements often. Also stay aware of how much other homes are being sold for in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
At the point your equity has reached the magic number of twenty percent, you are not far away from canceling your PMI payments, once and for all. First you will notify your lender that you are requesting to cancel your PMI. Your lender will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
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