Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed after July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity gets to higher than twenty-two percent. (There are some exceptions -like some "high risk' loans.) However, you are able to cancel PMI yourself (for mortgage loans closed after July 1999) at the point your equity reaches 20 percent, no matter the original purchase price.
Keep track of money going toward the principal. You'll want to stay aware of the the purchase prices of the homes that are selling around you. If your loan is under five years old, probably you haven't paid down much principal � you have paid mostly interest.
At the point your equity has reached the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact the mortgage lender to request cancellation of your Private Mortgage Insurance. Your lender will require proof that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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