Although lenders have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips below 78% of the purchase price, they do not have to cancel automatically if the equity is more than 22%. (Some "higher risk" mortgage loans are not included.) However, if your equity reaches 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a loan closed after July 1999).
Review your statements often. Pay attention to the selling prices of other houses in your neighborhood. Unfortunately, if you have a new loan - five years or fewer, you probably haven't been able to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling PMI when you're sure your equity has risen to 20%. You will need to contact your lending institution to alert them that you wish to cancel PMI payments. Lenders request proof of eligibility at this point. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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