Although lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance dips below 78% of the price of purchase, they do not have to take similar action if the borrower's equity is more than 22%. (There are some exceptions -like some "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a loan closing past July '99), regardless of the original price of purchase, when the equity reaches twenty percent.
Keep a running total of your principal payments. Also be aware of how much other homes are purchased for in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
At the point your equity has reached the desired twenty percent, you are close to canceling your PMI payments, once and for all. First you will tell your lender that you are asking to cancel your PMI. Lenders request proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they'll cancel PMI.
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