Although lenders have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance goes below 78% of the purchase price, they do not have to cancel automatically if the equity is above 22%. (Some "higher risk" loan programs are excluded.) But you are able to cancel PMI yourself (for loans made after July 1999) when your equity rises to 20 percent, no matter the original purchase price.
Keep track of money going toward the principal. Also be aware of the price that other homes are purchased for in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
At the point your equity has risen to the required twenty percent, you are close to stopping your PMI payments, once and for all. Contact your lending institution to ask for cancellation of your PMI. Next, 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) will be all the proof you need � and your lender will probably require one before they agree to cancel.
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