Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed after July of '99) reaches less than seventy-eight percent of the purchase price, but not at the point the borrower's equity gets to more than twenty-two percent. (There are exceptions -like some "high risk' loans.) However, if your equity reaches 20% (no matter what the original price was), you can cancel PMI (for a mortgage loan that after July 1999).
Study your monthly statements often. Pay attention to the purchase prices of other houses in your immediate area. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
At the point your equity has risen to the magic number of twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. First you will notify your lender that you are requesting to cancel your PMI. The lending institution will request documentation that your equity is at 20 percent or above. Usually lenders ask for 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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