For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of your purchase price � but not when the borrower earns 22 percent equity. (There are some exceptions -like some "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you can cancel PMI (for a loan closed past July 1999).
Study your monthly statements often. Pay attention to the prices of other homes in your neighborhood. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't lowered much.
You can begin the process of PMI cancelation at the time you calculate that your equity has risen to 20%. Call your mortgage lender to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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