Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed past July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to over twenty-two percent. (Certain "higher risk" loans are not included.) But if your equity rises to 20% (regardless of the original price of purchase), you are able to cancel your PMI (for a mortgage loan closed past July 1999).
Study your statements often. You'll want to be aware of the prices of the homes that sell in your neighborhood. If your loan is fewer than five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.
At the point you determine you have achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. You will first tell your lender that you are requesting to cancel your PMI. Lenders ask for documentation verifying your eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and most lending institutions will require one before they'll cancel PMI.
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