While lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance dips under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is more than 22%. (The legal requirment does not include a number of higher risk mortgages.) But if your equity reaches 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage loan that after July 1999).
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also keep track of how much other homes are selling for in your neighborhood. If your loan is under five years old, chances are you haven't paid down much principal � it's been mostly interest.
At the point your equity has reached the desired twenty percent, you are close to getting rid of your PMI payments, once and for all. Contact your lending institution to request cancellation of your Private Mortgage Insurance. The lending institution will require documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
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