Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to twenty-two percent or higher. (There are exceptions -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for your loan that closed after July '99), without considering the original purchase price, after the equity climbs to twenty percent.
Analyze your monthly statements often. Also stay aware of what other homes are purchased for in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
As soon as your equity has reached the magic number of twenty percent, you are not far away from getting rid of your PMI payments, once and for all. You will need to notify your mortgage lender that you want to cancel PMI. Lenders require documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel PMI.
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