Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) goes down below seventy-eight percent of the price of purchase, but not at the time the borrower's equity reaches twenty-two percent or higher. (Some "higher risk" mortgage loans are excluded.) But you have the right to cancel PMI yourself (for loans made after July 1999) at the point your equity gets to 20 percent, without consideration of the original price of purchase.
Familiarize yourself with your monthly statements to keep your eye on principal payments. You'll want to be aware of the the purchase amounts of the houses that are selling around you. Unfortunately, if you have a new mortgage - five years or under, you likely haven't begun to pay much of the principal: you have been paying mostly interest.
Once you think you've achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. Call your mortgage lender to request cancellation of PMI. The lending institution will ask for proof that your equity is at 20 percent or above. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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