Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans closed past July of that year) goes down below seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or higher. (A number of "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for a mortgage loan closing after July '99), regardless of the original price of purchase, at the point your equity rises to twenty percent.
Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to keep track of the prices of the houses that are selling in your neighborhood. If your loan is fewer than five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.
At the point your equity has risen to the desired twenty percent, you are close to getting rid of your PMI payments, for the life of your loan. You will first let your lending institution know that you are requesting to cancel PMI. Next, you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request one before they agree to cancel.
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