While lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance goes below 78% of the purchase price, they do not have to cancel automatically if the equity is more than 22%. (There are some loans that are excluded -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original price of purchase), you can cancel your PMI (for a loan closed past July 1999).
Familiarize yourself with your mortgage statements to keep a running total of principal payments. You'll want to stay aware of the the purchase prices of the homes that sell around you. Unfortunately, if you have a new mortgage - five years or under, you probably haven't had a chance to pay much of the principal: you are paying mostly interest.
You can begin the process of canceling PMI at the time you you think that your equity reaches 20%. Contact the mortgage lender to ask for cancellation of PMI. Next, you will be asked to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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