Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity gets to over twenty-two percent. (There are some exceptions -like certain "high risk' loans.) However, you have the right to cancel PMI yourself (for loans made past July 1999) when your equity reaches 20 percent, no matter the original purchase price.
Analyze your statements often. Also be aware of the price that other homes are purchased for in your neighborhood. If your mortgage is under five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.
You can start the process of PMI cancelation as soon as you determine your equity has reached 20%. Contact your lender to ask for cancellation of your PMI. Lenders request documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lenders will require one before they'll cancel PMI.
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