Since 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan made past July of '99) goes below seventy-eight percent of the purchase price, but not at the point the borrower's equity gets to twenty-two percent or more. (This law does not apply to certain higher risk mortgages.) However, you are able to cancel PMI yourself (for mortgage loans made past July 1999) when your equity gets to 20 percent, without consideration of the original purchase price.
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Also stay aware of the price that other homes are being sold for in your neighborhood. You are paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
At the point you determine you have achieved at least 20 percent equity in your home, you can begin the process of getting PMI out of your budget. Call the lending institution to request cancellation of your PMI. The lending institution will ask for documentation that your equity is high enough. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
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