While lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (Certain "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), regardless of the original purchase price, at the point your equity reaches twenty percent.
Familiarize yourself with your mortgage statements to keep track of principal payments. Find out the purchase prices of other homes in your immediate area. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
At the point your equity has risen to the required twenty percent, you are close to stopping your PMI payments, once and for all. You will need to call your lending institution to alert them that you want to cancel PMI. Next, you will be asked to submit proof that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
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