Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes below 78% of the price of purchase, they do not have to cancel automatically if the equity is over 22%. (There are some loans that are not included -like a number of "high risk' loans.) However, you are able to cancel PMI yourself (for loans made after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.
Keep track of each principal payment. Make yourself aware of the selling prices of other homes in your immediate area. If your loan is fewer than five years old, chances are you haven't paid down much principal - it's been mostly interest.
Once you find 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 notify your mortgage lender that you wish to cancel PMI payments. Next, you will be asked to submit documentation that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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