While lenders have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (There are some exceptions -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage closing past July '99), regardless of the original purchase price, at the point the equity reaches twenty percent.
Study your statements often. Also be aware of how much other homes are selling for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't started to pay much of the principal: you are paying mostly interest.
Once you find you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you wish to cancel PMI payments. Next, you will be required to submit documentation that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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