Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of that year) goes beneath seventy-eight percent of the price of purchase, but not when the borrower's equity gets to twenty-two percent or higher. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a loan closing past July '99), without considering the original purchase price, when your equity gets to twenty percent.
Keep a running total of money going toward the principal. Pay attention to the purchase prices of other houses in your neighborhood. Unfortunately, if you have a new mortgage - five years or fewer, you probably haven't been able to pay a lot of the principal: you have been paying mostly interest.
As soon as your equity has risen to the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. Call the lender to ask for cancellation of your PMI. Your lender will ask for proof that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
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