Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the point the borrower's equity climbs to twenty-two percent or higher. (There are exceptions -like some loans considered 'high risk'.) But you are able to cancel PMI yourself (for mortgages closed past July 1999) once your equity gets to 20 percent, no matter the original purchase price.
Study your statements often. You'll want to keep track of the prices of the homes that are selling around you. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.
At the point your equity has reached the magic number of twenty percent, you are close to stopping your PMI payments, once and for all. First you will let your lending institution know that you are requesting to cancel PMI. Lenders request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel.
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