Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to twenty-two percent or more. (This law does not include some higher risk mortgages.) But you are able to cancel PMI yourself (for loans made after July 1999) when your equity reaches 20 percent, no matter the original purchase price.
Familiarize yourself with your mortgage statements to keep track of principal payments. Pay attention to the prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage loan - five years or fewer, you probably haven't started to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling your PMI as soon as you're sure your equity reaches 20%. Contact the lending institution to ask for cancellation of PMI. Lenders request proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
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