Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not at the point the loan's equity climbs to over twenty-two percent. (There are some loans that are excluded -like some "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgages closed past July 1999) at the point your equity reaches 20 percent, no matter the original purchase price.
Familiarize yourself with your loan statements to keep your eye on principal payments. Make yourself aware of the purchase prices of other houses in your immediate area. Unfortunately, if you have a new loan - five years or under, you probably haven't begun to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling your PMI when you determine your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lending institutions ask for proof of eligibility at this point. 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 PMI.
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