Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of '99) goes down below seventy-eight percent of the purchase price, but not when the borrower's equity gets to twenty-two percent or higher. (Some "higher risk" loans are excluded.) 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, when your equity gets to twenty percent.
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to keep track of the the purchase prices of the houses that sell around you. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
You can begin the process of canceling your PMI as soon as you determine your equity has risen to 20%. Contact your lending institution to ask for cancellation of PMI. Lenders ask for proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lenders will require one before they'll cancel PMI.
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