Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of that year) goes down below seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to twenty-two percent or more. (There are some exceptions -like a number of "high risk' loans.) However, you are able to cancel PMI yourself (for loans made after July 1999) once your equity rises to 20 percent, regardless of the original purchase price.
Review your loan statements often. Also keep track of what other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you likely haven't started to pay a lot of the principal: you are paying mostly interest.
You can start the process of canceling your PMI at the time you're sure your equity has risen to 20%. First you will notify your lender that you are requesting to cancel your PMI. Then you will be required to verify that you have at least 20 percent equity. 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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