While lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance dips below 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is above 22%. (Certain "higher risk" loans are excluded.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed past July '99), regardless of the original price of purchase, when the equity climbs to twenty percent.
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to be aware of the the purchase prices of the houses that are selling around you. If your mortgage is fewer than five years old, it's likely you haven't greatly reduced principal � you have been paying mostly interest.
When you find you have reached 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. You will first let your lender know that you are asking to cancel PMI. Lenders request paperwork verifying your eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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