Although lenders have been required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance dips under 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is more than 22%. (There are some exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (regardless of the original price of purchase), you have the legal right to cancel the PMI (for a mortgage loan closed after July 1999).
Review your loan statements often. Find out the prices of other homes in your neighborhood. If your loan is under five years old, probably you haven't made much progress with the principal � you have been paying mostly interest.
You can start the process of canceling your PMI when you're sure your equity has risen to 20%. You will first tell your lender that you are asking to cancel PMI. The lending institution will request documentation that your equity is at 20 percent or above. You can get documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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