For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some loans considered 'high risk'.) However, if your equity gets to 20% (no matter what the original price was), you are able to cancel your PMI (for a loan that past July 1999).
Familiarize yourself with your loan statements to keep track of principal payments. You'll want to stay aware of the the purchase amounts of the houses that are selling around you. If your loan is fewer than five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Once your equity has reached the magic number of twenty percent, you are close to getting rid of your PMI payments, once and for all. Contact the mortgage lender to request cancellation of PMI. Next, you will be asked to verify that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.
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