For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets below 78 percent of the purchase price � but not at the point the loan reaches 22 percent equity. (There are some exceptions -like some loans considered 'high risk'.) But if your equity gets to 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage that after July 1999).
Keep a running total of your principal payments. Find out the prices of other houses in your neighborhood. Unfortunately, if you have a new loan - five years or fewer, you likely haven't had a chance to pay a lot of the principal: you have been paying mostly interest.
You can start the process of PMI cancelation at the time you're sure your equity reaches 20%. You will need to notify your mortgage lender that you want to cancel PMI. Then you will be required to submit proof that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
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