While lenders have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance gets below 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed after July '99), no matter the original purchase price, after the equity climbs to twenty percent.
Analyze your statements often. You'll want to keep track of the prices of the houses that are selling around you. Unfortunately, if you have a new loan - five years or fewer, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.
You can begin the process of canceling your PMI as soon as you calculate that your equity reaches 20%. You will need to contact the mortgage lender to let them know that you wish to cancel PMI. Lenders ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
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