Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is above 22%. (This legal obligation does not apply to certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for your mortgage that closed after July '99), regardless of the original price of purchase, once the equity rises to twenty percent.
Review your statements often. Make yourself aware of the prices of other homes in your immediate area. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't lowered much.
As soon as your equity has reached the desired twenty percent, you are close to canceling your PMI payments, once and for all. Call your lending institution to ask for cancellation of your PMI. Your lender will ask for documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and your lender will probably require one before they agree to cancel.
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