Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of '99) goes below seventy-eight percent of the purchase price, but not when the loan's equity climbs to over twenty-two percent. (Certain "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), no matter the original price of purchase, once the equity rises to twenty percent.
Study your monthly statements often. Also be aware of what other homes are being sold for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't been reduced by much.
You can start the process of canceling your PMI at the time you determine your equity has risen to 20%. Contact your lender to request cancellation of PMI. Next, you will be required to verify that you have at least 20 percent equity. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.
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