Beginning in 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made after July of '99) goes under seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to more than twenty-two percent. (A number of "higher risk" loan programs are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan closing after July '99), no matter the original price of purchase, after the equity gets to twenty percent.
Study your monthly statements often. Also be aware of what other homes are being sold for in your neighborhood. Unfortunately, if you have a new mortgage - five years or fewer, you probably haven't begun to pay much of the principal: you are paying mostly interest.
You can start the process of PMI cancelation as soon as you calculate that your equity has reached 20%. You will first notify your lender that you are requesting to cancel PMI. Lenders require proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they'll cancel PMI.
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