Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity reaches twenty-two percent or higher. (There are some exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage that past July 1999).
Review your statements often. Find out the purchase prices of other homes in your neighborhood. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.
As soon as your equity has reached the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will need to call the mortgage lender to let them know that you want to cancel PMI. Your lender will require documentation that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lending institutions request one before they'll cancel PMI.
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