Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made after July of '99) goes under seventy-eight percent of the purchase price, but not when the loan's equity gets to twenty-two percent or higher. (Some "higher risk" loan programs are not included.) But if your equity gets to 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a loan that past July 1999).
Keep a running total of your principal payments. Also stay aware of what other homes are purchased for in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
As soon as your equity has risen to the required twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. Call your mortgage lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lenders require one before they agree to cancel.
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