For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78 percent of your purchase price � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage that closed after July '99), without considering the original price of purchase, at the point your equity climbs to twenty percent.
Familiarize yourself with your loan statements to keep track of principal payments. You'll want to be aware of the the purchase prices of the homes that are selling around you. Unfortunately, if you have a recent loan - five years or fewer, you likely haven't been able to pay a lot of the principal: you are paying mostly interest.
You can begin the process of PMI cancelation as soon as you calculate that your equity has reached 20%. First you will let your lender know that you are requesting to cancel your PMI. Lenders require proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably request one before they agree to cancel.
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