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 loans made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity gets to more than twenty-two percent. (There are exceptions -like certain "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage loan closed past July 1999).
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also be aware of the price that other homes are being sold for in your neighborhood. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
As soon as your equity has reached the required twenty percent, you are close to canceling your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI payments. Your lender will ask for documentation that your equity is at 20 percent or above. You can acquire documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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