For loans made after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes lower than 78 percent of your purchase price � but not at the point the borrower achieves 22 percent equity. (Some "higher risk" mortgage loans are not included.) The good news is that you can request cancelation of your PMI yourself (for your mortgage that closed past July '99), no matter the original price of purchase, once the equity rises to twenty percent.
Keep track of each principal payment. Make yourself aware of the prices of other homes in your immediate area. If your loan is under five years old, it's likely you haven't made much progress with the principal � you have been paying mostly interest.
At the point your equity has reached the desired twenty percent, you are close to canceling your PMI payments, once and for all. First you will let your lending institution know that you are asking to cancel your PMI. Lenders request proof of eligibility at this point. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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