Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity gets to over twenty-two percent. (The legal requirment does not cover certain higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgages closed after July 1999) once your equity reaches 20 percent, without consideration of the original purchase price.
Analyze your loan statements often. Also keep track of what other homes are being sold for in your neighborhood. You've been paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal probably hasn't been reduced by much.
You can start the process of PMI cancelation as soon as you calculate that your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lenders ask for proof of eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
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