For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of your purchase amount � but not at the point the borrower earns 22 percent equity. (There are some loans that are not covered by this law -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your loan closing past July '99), regardless of the original purchase price, at the point your equity climbs to twenty percent.
Review your monthly statements often. Also be aware of what other homes are selling for in your neighborhood. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal most likely hasn't lowered much.
Once your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, once and for all. Contact the mortgage lender to ask for cancellation of PMI. Lenders require proof of eligibility at this point. You can acquire proof 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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