Although lending institutions have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (There are some loans that are excluded -like some loans considered 'high risk'.) However, if your equity gets to 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a loan closed past July 1999).
Keep track of each principal payment. Also be aware of how much other homes are purchased for in your neighborhood. Unfortunately, if you have a new loan - five years or under, you probably haven't been able to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling PMI when you calculate that your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Your lender will require documentation that your equity is at 20 percent or above. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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