Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed after July of that year) goes beneath seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (There are some loans that are not included -like a number of "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed after July '99), regardless of the original purchase price, once your equity climbs to twenty percent.
Analyze your statements often. Find out the prices of other houses in your immediate area. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't lowered much.
When you think you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI payments. Lending institutions ask for documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they'll cancel PMI.
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