Although lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance gets below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is above 22%. (Some "higher risk" loan programs are not included.) The good news is that you can cancel your PMI yourself (for your mortgage closing past July '99), without considering the original purchase price, at the point your equity climbs to twenty percent.
Keep a running total of your principal payments. Pay attention to the prices of other houses in your immediate area. Unfortunately, if yours is a new loan - five years or under, you probably haven't had a chance to pay much of the principal: you have been paying mostly interest.
At the point your equity has reached the desired twenty percent, you are not far away from stopping your PMI payments, once and for all. Call the lender to request cancellation of your PMI. Lending institutions ask for paperwork verifying your eligibility at this point. Usually 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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