While lenders have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes below 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (This legal requirment does not apply to certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), no matter the original price of purchase, once the equity rises to twenty percent.
Keep a running total of your principal payments. Find out the purchase prices of other houses in your neighborhood. Unfortunately, if yours is a new loan - five years or under, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.
Once you think you have achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Contact the lender to ask for cancellation of your Private Mortgage Insurance. Then you will be asked to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and almost all lenders request one before they agree to cancel PMI.
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