Although lending institutions have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the mortgage balance goes below 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (There are some exceptions -like certain "high risk' loans.) But if your equity gets to 20% (no matter what the original purchase price was), you can cancel your PMI (for a loan that after July 1999).
Keep a running total of each principal payment. Also stay aware of what other homes are purchased for in your neighborhood. You are paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't lowered much.
Once you find you have reached 20 percent equity, you can begin the process of getting PMI out of your budget. Contact the lending institution to request cancellation of your Private Mortgage Insurance. Lenders request documentation verifying your eligibility at this point. You can acquire proof of your equity by getting 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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