While lenders have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes below 78% of the purchase price, they do not have to take similar action if the borrower's equity is more than 22%. (This law does not apply to a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgage loans made after July 1999) once your equity gets to 20 percent, regardless of the original purchase price.
Analyze your loan statements often. Find out the selling prices of other houses in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
At the point you find you've reached 20 percent equity, you can start the process of getting PMI out of your budget. Call your lender to request cancellation of your PMI. Lenders request paperwork verifying your eligibility at this point. A state certified appraisal documented on 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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