Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of that year) goes down below seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to higher than twenty-two percent. (This legal obligation does not include a number of higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan that closed after July '99), without considering the original purchase price, at the point your equity climbs to twenty percent.
Review your mortgage statements often. Pay attention to the prices of other homes in your neighborhood. If your loan is fewer than five years old, it's likely you haven't greatly reduced principal � you have been paying mostly interest.
Once your equity has reached the required twenty percent, you are close to stopping your PMI payments, once and for all. First you will notify your lender that you are requesting to cancel your PMI. Then you will be required to submit proof that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and almost all lending institutions will require one before they'll cancel PMI.
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