Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed after July of '99) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (Certain "higher risk" loan programs are not included.) The good news is that you can request cancelation of your PMI yourself (for a loan closing after July '99), regardless of the original price of purchase, once your equity rises to twenty percent.
Keep a running total of money going toward the principal. Pay attention to the purchase prices of other houses in your immediate area. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
You can begin the process of canceling PMI as soon as you're sure your equity has risen to 20%. Contact your lender to request cancellation of your Private Mortgage Insurance. The lending institution will request documentation that your equity is high enough. A state certified appraisal using 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.
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