Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made after July of '99) goes below seventy-eight percent of the price of purchase, but not when the loan's equity climbs to twenty-two percent or higher. (This law does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), no matter the original price of purchase, once the equity rises to twenty percent.
Review your monthly statements often. You'll want to keep track of the the purchase amounts of the homes that sell around you. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.
At the point your equity has reached the magic number of twenty percent, you are not far away from canceling your PMI payments, for the life of your loan. You will need to contact the lending institution to let them know that you wish to cancel PMI. Next, you will be required to verify that you have at least 20 percent equity. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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