Although lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is above 22%. (There are some exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a mortgage loan that past July 1999).
Review your statements often. You'll want to be aware of the the purchase amounts of the homes that are selling around you. If your loan is fewer than five years old, probably you haven't paid down much principal � you have been paying mostly interest.
When you think you've achieved at least 20 percent equity in your home, you can begin the process of freeing yourself from PMI payments. You will need to contact the lender to alert them that you wish to cancel PMI payments. Your lender will request documentation that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lending institutions request one before they agree to cancel.
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