While lending institutions have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance dips under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (Certain "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), no matter the original purchase price, at the point the equity reaches twenty percent.
Familiarize yourself with your monthly statements to keep a running total of principal payments. You'll want to stay aware of the prices of the houses that are selling around you. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
At the point you find you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. Call the mortgage lender to ask for cancellation of PMI. Next, you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they agree to cancel PMI.
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