Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is above 22%. (Some "higher risk" loans are excluded.) However, if your equity reaches 20% (no matter what the original purchase price was), you can cancel your PMI (for a mortgage that after July 1999).
Study your monthly statements often. Also keep track of what other homes are being sold for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
You can begin the process of PMI cancelation at the time you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Lenders require paperwork verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel PMI.
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