Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) goes down below seventy-eight percent of the purchase price, but not at the time the loan's equity reaches twenty-two percent or more. (There are some loans that are excluded -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), without considering the original price of purchase, after the equity reaches twenty percent.
Review your loan statements often. Find out the purchase prices of other homes in your immediate area. If your loan is fewer than five years old, probably you haven't paid down much principal � it's been mostly interest.
Once your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, once and for all. Contact your mortgage lender to request cancellation of PMI. Lenders request documentation verifying your eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and almost all lending institutions require one before they'll cancel PMI.
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