Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of '99) reaches less than seventy-eight percent of the purchase price, but not at the point the borrower's equity reaches twenty-two percent or more. (The law does not apply to some higher risk mortgages.) But you have the right to cancel PMI yourself (for loans closed past July 1999) once your equity gets to 20 percent, no matter the original purchase price.
Keep track of money going toward the principal. Pay attention to the selling prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or under, you likely haven't begun to pay a lot of the principal: you are paying mostly interest.
You can begin the process of canceling your PMI as soon as you you think that your equity has risen to 20%. You will need to call your lending institution to let them know that you wish to cancel PMI payments. Next, you will be asked to verify that you have at least 20 percent equity. You can acquire proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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