Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) 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. (Certain "higher risk" mortgage loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing past July '99), no matter the original price of purchase, at the point your equity rises to twenty percent.
Study your mortgage statements often. You'll want to stay aware of the the purchase amounts of the homes that sell in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you probably haven't begun to pay very much of the principal: you are paying mostly interest.
At the point you find you have reached 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. First you will let your lender know that you are requesting to cancel PMI. Lenders ask for proof of eligibility at this point. You can get proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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