For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls lower than 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (There are some loans that are excluded -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed past July '99), no matter the original price of purchase, when the equity climbs to twenty percent.
Keep a running total of your principal payments. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or under, you likely haven't had a chance to pay very much of the principal: you are paying mostly interest.
You can start the process of PMI cancelation when you're sure your equity has reached 20%. You will need to call your mortgage lender to let them know that you wish to cancel PMI payments. Lending institutions request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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