For loans closed since July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls under 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (There are exceptions -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a mortgage loan closing past July '99), without considering the original price of purchase, when your equity rises to twenty percent.
Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to be aware of the the purchase amounts of the houses that sell around you. Unfortunately, if you have a new mortgage - five years or under, you probably haven't begun to pay a lot of the principal: you have been paying mostly interest.
At the point your equity has reached the required twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. Call your lending institution to ask for cancellation of your PMI. Next, you will be asked to verify that you have at least 20 percent equity. You can get proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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