Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity reaches higher than twenty-two percent. (There are exceptions -like some loans considered 'high risk'.) But if your equity rises to 20% (regardless of the original purchase price), you are able to cancel your PMI (for a mortgage loan closed past July 1999).
Keep a running total of your principal payments. Find out the prices of other homes in your immediate area. If your mortgage is under five years old, probably you haven't paid down much principal � you have paid mostly interest.
You can start the process of canceling your PMI at the time you're sure your equity has reached 20%. Call the mortgage lender to ask for cancellation of your PMI. Next, you will be asked to submit documentation that you are eligible to cancel. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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