Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans closed after July of that year) goes down below seventy-eight percent of the purchase price, but not at the time the borrower's equity reaches twenty-two percent or higher. (The legal obligation does not include certain higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage closing after July '99), no matter the original price of purchase, when the equity rises to twenty percent.
Study your monthly statements often. Also be aware of what other homes are purchased for in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
Once your equity has risen to the desired twenty percent, you are not far away from stopping your PMI payments, once and for all. You will need to contact your lending institution to let them know that you want to cancel PMI payments. Lending institutions request documentation verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
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