Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made after July of that year) goes below seventy-eight percent of the purchase price, but not when the borrower's equity reaches over twenty-two percent. (The legal requirment does not apply to a number of higher risk mortgages.) But you have the right to cancel PMI yourself (for mortgages made past July 1999) at the point your equity reaches 20 percent, no matter the original purchase price.
Keep track of each principal payment. Also keep track of the price that other homes are purchased for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
Once your equity has reached the required twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. You will first tell your lender that you are asking to cancel PMI. Lending institutions require proof of eligibility at this point. You can acquire documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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