Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the borrower's equity climbs to higher than twenty-two percent. (There are exceptions -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgages made after July 1999) once your equity gets to 20 percent, without consideration of the original purchase price.
Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to be aware of the the purchase prices of the homes that are selling in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you probably haven't been able to pay a lot of the principal: you are paying mostly interest.
At the point your equity has risen to the required twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. Contact the lender to ask for cancellation of PMI. Lenders ask for paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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