Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or more. (A number of "higher risk" loan programs are excluded.) However, if your equity rises to 20% (regardless of the original purchase price), you are able to cancel the PMI (for a mortgage loan that after July 1999).
Keep a running total of your principal payments. You'll want to be aware of the prices of the homes that sell around you. If your mortgage is fewer than five years old, chances are you haven't paid down much principal � it's been mostly interest.
As soon as your equity has risen to the magic number of twenty percent, you are not far away from getting rid of your PMI payments, once and for all. You will first tell your lender that you are asking to cancel PMI. Lenders require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and most lenders will require one before they agree to cancel.
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