While lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes under 78% of the price of purchase, they do not have to take similar action if the loan's equity is more than 22%. (The legal obligation does not apply to some higher risk mortgages.) However, you are able to cancel PMI yourself (for loans made past July 1999) once your equity gets to 20 percent, no matter the original purchase price.
Familiarize yourself with your monthly statements to keep track of principal payments. Make yourself aware of the prices of other houses in your immediate area. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
You can begin the process of canceling your PMI when you calculate that your equity has risen to 20%. Contact the mortgage lender to ask for cancellation of your Private Mortgage Insurance. Your lender will ask for proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lenders require one before they agree to cancel PMI.
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