For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes lower than 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (This legal requirment does not apply to certain higher risk mortgages.) However, if your equity gets to 20% (no matter what the original price was), you have the right to cancel PMI (for a loan that past July 1999).
Keep track of money going toward the principal. Find out the prices of other homes in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or fewer, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.
At the point you find you have achieved at least 20 percent equity in your home, you can start the process of getting PMI out of your budget. First you will let your lender know that you are asking to cancel PMI. Next, you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably require one before they agree to cancel PMI.
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