Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity reaches more than twenty-two percent. (This legal requirement does not cover a number of higher risk mortgages.) The good news is that you can request cancellation of your PMI yourself (for a mortgage loan that closed past July '99), no matter the original price of purchase, at the point your equity reaches twenty percent.
Study your monthly statements often. Also stay aware of the price that other homes are purchased for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal - you have paid mostly interest.
You can begin the process of canceling your PMI when you're sure your equity reaches 20%. Call your lender to ask for cancellation of your PMI. Then you will be asked to submit documentation that you are eligible to cancel. You can acquire proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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