Although lending institutions have been legally obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the purchase price, they do not have to take similar action if the equity is over 22%. (This legal obligation does not include a number of higher risk mortgages.) However, if your equity reaches 20% (regardless of the original purchase price), you have the legal right to cancel your PMI (for a mortgage loan that past July 1999).
Review your statements often. You'll want to keep track of the prices of the houses that are selling around you. If your loan is under five years old, probably you haven't made much progress with the principal � you have paid mostly interest.
Once you determine you've achieved at least 20 percent equity, you can begin the process of canceling your Private Mortgage Insurance. Call your mortgage lender to ask for cancellation of PMI. Then you will be asked to submit proof that you are eligible to cancel. Most lenders require 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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