Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of '99) goes down below seventy-eight percent of the price of purchase, but not when the loan's equity gets to twenty-two percent or higher. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed past July '99), without considering the original price of purchase, at the point the equity climbs to twenty percent.
Keep a running total of each principal payment. Find out the prices of other houses in your neighborhood. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't gone down much.
When you determine you have achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. Call the lending institution to request cancellation of your PMI. Lenders request proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and most lending institutions will require one before they'll cancel PMI.
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