Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity climbs to twenty-two percent or more. (There are some loans that are not included -like some loans considered 'high risk'.) The good news is that you can cancel your PMI yourself (for your loan that closed after July '99), no matter the original price of purchase, once the equity gets to twenty percent.
Keep a running total of your principal payments. You'll want to keep track of the the purchase amounts of the houses that are selling in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
You can begin the process of PMI cancelation when you calculate that your equity reaches 20%. You will first let your lending institution know that you are requesting to cancel PMI. The lending institution will require proof that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they'll cancel PMI.
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