For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of the purchase price � but not when the borrower achieves 22 percent equity. (Certain "higher risk" morgages are excluded.) However, you have the right to cancel PMI yourself (for loans closed past July 1999) at the point your equity rises to 20 percent, without consideration of the original purchase price.
Review your statements often. Also be aware of how much other homes are selling for in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't started to pay much of the principal: you are paying mostly interest.
At the point your equity has risen to the required twenty percent, you are close to canceling your PMI payments, once and for all. You will first notify your lender that you are requesting to cancel PMI. The lending institution will require proof that your equity is at 20 percent or above. You can acquire documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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