Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for loans made past July of that year) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity climbs to over twenty-two percent. (There are some loans that are not covered by this law -like some "high risk' loans.) But if your equity rises to 20% (no matter what the original price was), you are able to cancel your PMI (for a mortgage loan that past July 1999).
Review your statements often. You'll want to stay aware of the the purchase prices of the houses that are selling around you. If your loan is fewer than five years old, chances are you haven't made much progress with the principal � you have been paying mostly interest.
You can begin the process of canceling your PMI at the time you're sure your equity has risen to 20%. Contact the mortgage lender to ask for cancellation of PMI. Then you will be asked to submit documentation that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and most lending institutions will require one before they'll cancel PMI.
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