For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (There are some loans that are excluded -like some loans considered 'high risk'.) However, you can actually cancel PMI yourself (for mortgages closed after July 1999) when your equity rises to 20 percent, without consideration of the original price of purchase.
Analyze your statements often. Also stay aware of what other homes are selling for in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
At the point your equity has risen to the magic number of twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact the lending institution to ask for cancellation of your Private Mortgage Insurance. Lenders request proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably request one before they'll cancel PMI.
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