While lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (This legal requirment does not cover some higher risk mortgages.) But you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity gets to 20 percent, no matter the original purchase price.
Analyze your statements often. Also stay aware of the price that other homes are selling for in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't lowered much.
You can begin the process of canceling PMI when you you think that your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Your lender will ask for proof that your equity is high enough. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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