Although lending institutions have been obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance goes below 78% of the purchase price, they do not have to take similar action if the equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for loans made past July 1999) when your equity reaches 20 percent, no matter the original price of purchase.
Familiarize yourself with your monthly statements to keep a running total of principal payments. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage loan - five years or under, you likely haven't had a chance to pay much of the principal: you are paying mostly interest.
You can begin the process of PMI cancelation when you're sure your equity has risen to 20%. You will need to call your lender to alert them that you want to cancel PMI. The lending institution will ask for proof that your equity is high enough. 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 canceling PMI.
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