Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed after July of '99) goes under seventy-eight percent of the price of purchase, but not when the borrower's equity reaches higher than twenty-two percent. (Certain "higher risk" loan programs are not included.) However, if your equity gets to 20% (no matter what the original purchase price was), you can cancel PMI (for a loan that after July 1999).
Study your mortgage statements often. Pay attention to the prices of other homes in your immediate area. You are paying mostly interest if you closed your mortgage loan fewer than 5 years ago, so your principal most likely hasn't gone down much.
Once you think you have achieved at least 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will need to notify your mortgage lender that you want to cancel PMI. Your lender will require proof that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
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