Although lenders have been obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance dips below 78% of the price of purchase, they do not have to cancel automatically if the equity is above 22%. (A number of "higher risk" mortgage loans are excluded.) But you are able to cancel PMI yourself (for loans closed after July 1999) when your equity gets to 20 percent, without consideration of the original price of purchase.
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also stay aware of what other homes are purchased for in your neighborhood. Unfortunately, if you have a new mortgage loan - five years or fewer, you probably haven't had a chance to pay much of the principal: you have been paying mostly interest.
At the point your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will need to contact your lending institution to alert them that you wish to cancel PMI. Your lender will ask for documentation that your equity is high enough. You can acquire proof of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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