Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of '99) goes beneath seventy-eight percent of the price of purchase, but not when the loan's equity gets to twenty-two percent or higher. (Certain "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed after July '99), no matter the original price of purchase, after your equity gets to twenty percent.
Keep a running total of money going toward the principal. You'll want to be aware of the prices of the homes that are selling around you. Unfortunately, if you have a new mortgage - five years or fewer, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.
At the point your equity has reached the desired twenty percent, you are not far away from getting rid of your PMI payments, for the life of your loan. Call the mortgage lender to ask for cancellation of your PMI. Lending institutions require paperwork verifying your eligibility at this point. 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 request one before they'll cancel PMI.
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