Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity reaches higher than twenty-two percent. (A number of "higher risk" loans are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan closing after July '99), regardless of the original price of purchase, once the equity climbs to twenty percent.
Review your loan statements often. Also be aware of how much other homes are being sold for in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
At the point your equity has risen to the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. Contact the lender to ask for cancellation of PMI. Next, you will be asked to verify that you have at least 20 percent equity. You can acquire documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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