Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of that year) goes down below seventy-eight percent of the purchase price, but not at the point the borrower's equity climbs to twenty-two percent or more. (There are exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (no matter what the original price was), you are able to cancel PMI (for a loan closed past July 1999).
Keep track of your principal payments. Also stay aware of how much other homes are selling for in your neighborhood. If your loan is under five years old, it's likely you haven't paid down much principal � it's been mostly interest.
You can begin the process of PMI cancelation as soon as you determine your equity has reached 20%. First you will let your lending institution know that you are asking to cancel PMI. The lending institution will request documentation that your equity is high enough. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for canceling PMI.
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