For loans closed after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of your purchase amount - but not when the borrower achieves 22 percent equity. (There are exceptions -like a number of "high risk' loans.) However, if your equity rises to 20% (regardless of the original price of purchase), you can cancel your PMI (for a mortgage loan closed after July 1999).
Review your statements often. Pay attention to the prices of other houses in your immediate area. Unfortunately, if yours is a recent loan - five years or fewer, you probably haven't had a chance to pay very much of the principal: you have been paying mostly interest.
You can begin the process of PMI cancellation at the time you're sure your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. The lending institution will request proof that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
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