For loans closed after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78 percent of your purchase price � but not at the point the borrower earns 22 percent equity. (There are some loans that are excluded -like some "high risk' loans.) However, if your equity rises to 20% (regardless of the original price of purchase), you have the right to cancel PMI (for a loan that after July 1999).
Keep a running total of money going toward the principal. 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, probably you haven't greatly reduced principal � you have paid mostly interest.
You can start the process of PMI cancelation at the time you're sure your equity reaches 20%. You will need to call the lender to alert them that you want to cancel PMI payments. Your lender will request proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and most lenders request one before they agree to cancel PMI.
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