While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance dips below 78% of the purchase price, they do not have to take similar action if the borrower's equity is over 22%. (There are some exceptions -like certain "high risk' loans.) But you have the right to cancel PMI yourself (for loans closed after July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.
Familiarize yourself with your loan statements to keep track of principal payments. Make yourself aware of the purchase prices of other houses in your neighborhood. If your loan is under five years old, probably you haven't greatly reduced principal � you have paid mostly interest.
As soon as your equity has reached the required twenty percent, you are not far away from getting rid of your PMI payments, for the life of your loan. Call your lending institution to ask for cancellation of PMI. Next, you will be required to submit proof that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lenders require one before they agree to cancel PMI.
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