For loans made after July 1999, lending institutions are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls lower than 78 percent of the purchase price � but not at the point the borrower achieves 22 percent equity. (Certain "higher risk" mortgage loans are excluded.) However, you can actually cancel PMI yourself (for mortgage loans closed after July 1999) when your equity reaches 20 percent, regardless of the original purchase price.
Analyze your monthly statements often. Find out the purchase prices of other homes in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.
As soon as your equity has reached the desired twenty percent, you are close to getting rid of your PMI payments, once and for all. First you will notify your lender that you are asking to cancel PMI. Then you will be asked to submit proof that you have at least 20 percent equity. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
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