While lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the price of purchase, they do not have to take similar action if the loan's equity is over 22%. (A number of "higher risk" morgages are excluded.) The good news is that you can cancel your PMI yourself (for a loan closing past July '99), without considering the original price of purchase, after the equity reaches twenty percent.
Familiarize yourself with your monthly statements to keep a running total of principal payments. Also be aware of what other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal � you have paid mostly interest.
At the point your equity has reached the desired twenty percent, you are just a few steps away from getting rid of your PMI payments, once and for all. Contact the mortgage lender to request cancellation of your Private Mortgage Insurance. Next, you will be required to verify that you have at least 20 percent equity. You can get documentation of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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