While lenders have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the loan's equity is over 22%. (There are exceptions -like some loans considered 'high risk'.) However, if your equity rises to 20% (no matter what the original price was), you can cancel your PMI (for a mortgage loan closed past July 1999).
Review your mortgage statements often. You'll want to keep track of the the purchase prices of the homes that sell around you. If your mortgage is fewer than five years old, chances are you haven't greatly reduced principal � it's been mostly interest.
At the point you think you have reached 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Call your mortgage lender to request cancellation of your PMI. Next, you will be required to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lenders request one before they'll cancel PMI.
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