Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made after July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the point the loan's equity climbs to twenty-two percent or higher. (There are some loans that are excluded -like some loans considered 'high risk'.) But if your equity rises to 20% (no matter what the original price was), you have the legal right to cancel PMI (for a mortgage loan that past July 1999).
Study your statements often. You'll want to keep track of the prices of the homes that sell around you. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
You can start the process of canceling your PMI at the time you calculate that your equity has reached 20%. You will need to notify your mortgage lender that you want to cancel PMI payments. Then you will be required to submit documentation that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably require one before they agree to cancel PMI.
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