While lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets below 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (There are exceptions -like a number of "high risk' loans.) But if your equity gets to 20% (regardless of the original price of purchase), you can cancel your PMI (for a loan closed past July 1999).
Review your statements often. You'll want to stay aware of the prices of the houses that sell around you. If your loan is under five years old, chances are you haven't greatly reduced principal � you have been paying mostly interest.
You can start the process of PMI cancelation when you're sure your equity has risen to 20%. First you will notify your lender that you are requesting to cancel PMI. Then you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel.
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