Since 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the loan's equity gets to more than twenty-two percent. (There are some 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 mortgage that past July 1999).
Familiarize yourself with your loan statements to keep track of principal payments. Also stay aware of what other homes are selling for in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
At the point you think you've reached 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. You will first tell your lender that you are asking to cancel your PMI. Then you will be required to verify that you have at least 20 percent equity. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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