While lending institutions have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets below 78% of the purchase price, they do not have to cancel automatically if the equity is over 22%. (The legal obligation does not include a number of higher risk mortgages.) But if your equity gets to 20% (regardless of the original price of purchase), you can cancel the PMI (for a mortgage loan that past July 1999).
Familiarize yourself with your mortgage statements to keep track of principal payments. You'll want to keep track of the the purchase prices of the homes that sell in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't lowered much.
You can start the process of canceling your PMI at the time you're sure your equity has reached 20%. First you will let your lending institution know that you are asking to cancel PMI. Then you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and almost all lenders require one before they agree to cancel PMI.
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