Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is more than 22%. (There are some loans that are not included -like some loans considered 'high risk'.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a loan that after July 1999).
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Make yourself aware of the prices of other homes in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.
Once you find you have reached 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will ask for proof that your equity is high enough. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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