Since 1999, lenders have been required 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 price of purchase, but not when the borrower's equity climbs to twenty-two percent or more. (This legal requirment does not cover a number of higher risk mortgages.) However, you have the right to cancel PMI yourself (for loans closed past July 1999) when your equity rises to 20 percent, no matter the original purchase price.
Analyze your loan statements often. You'll want to stay aware of the the purchase prices of the houses that are selling around you. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � you have been paying mostly interest.
You can begin the process of PMI cancelation as soon as you're sure your equity has risen to 20%. You will first let your lender know that you are requesting to cancel PMI. Your lender will request proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lenders require one before they'll cancel PMI.
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