For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of your purchase amount � but not at the point the borrower achieves 22 percent equity. (There are some exceptions -like certain "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgage loans made after July 1999) when your equity gets to 20 percent, without consideration of the original price of purchase.
Study your loan statements often. Also be aware of the price that other homes are purchased for in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
Once you determine you have achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. You will first let your lender know that you are requesting to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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