Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of '99) goes beneath seventy-eight percent of the purchase price, but not when the borrower's equity gets to over twenty-two percent. (Some "higher risk" loans are not included.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed past July '99), no matter the original price of purchase, when your equity climbs to twenty percent.
Keep track of each principal payment. Find out the selling prices of other homes in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't lowered much.
Once your equity has reached the desired twenty percent, you are close to getting rid of your PMI payments, once and for all. First you will notify your lender that you are asking to cancel your PMI. Next, you will be asked to submit documentation that you are eligible to cancel. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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