While lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the equity is more than 22%. (The legal requirment does not cover certain higher risk mortgages.) But you are able to cancel PMI yourself (for loans made past July 1999) when your equity rises to 20 percent, without consideration of the original price of purchase.
Study your statements often. Also be aware of what other homes are being sold for in your neighborhood. If your loan is fewer than five years old, probably you haven't made much progress with the principal � it's been mostly interest.
Once you think you have reached 20 percent equity, you can begin the process of getting PMI out of your budget. Call the mortgage lender to ask for cancellation of PMI. Lenders require proof of eligibility at this point. 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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