For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of your purchase amount � but not at the point the borrower earns 22 percent equity. (Some "higher risk" mortgage loans are excluded.) However, if your equity reaches 20% (no matter what the original price was), you have the right to cancel PMI (for a mortgage that past July 1999).
Analyze your mortgage statements often. Make yourself aware of the purchase prices of other houses in your immediate area. Unfortunately, if you have a recent loan - five years or fewer, you likely haven't begun to pay much of the principal: you have been paying mostly interest.
You can start the process of canceling your PMI at the time you're sure your equity has risen to 20%. You will need to call the mortgage lender to let them know that you want to cancel PMI. The lending institution will ask for proof that your equity is at 20 percent or above. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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