Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of that year) goes down below seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to over twenty-two percent. (A number of "higher risk" loan programs are excluded.) However, if your equity gets to 20% (no matter what the original purchase price was), you can cancel the PMI (for a mortgage that past July 1999).
Analyze your mortgage statements often. You'll want to stay aware of the the purchase prices of the houses that sell in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.
Once you find you've achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Your lender will require documentation that your equity is at 20 percent or above. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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