Although lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point 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%. (This law does not cover a number of higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a loan that closed past July '99), no matter the original price of purchase, when the equity gets to twenty percent.
Study your statements often. Also keep track of how much other homes are selling for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you probably haven't been able to pay much of the principal: you are paying mostly interest.
When you determine you've reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. First you will let your lending institution know that you are asking to cancel PMI. The lending institution will request documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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