While lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance goes below 78% of the price of purchase, they do not have to take similar action if the equity is more than 22%. (Certain "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for your loan that closed past July '99), regardless of the original price of purchase, once the equity climbs to twenty percent.
Analyze your statements often. Make yourself aware of the selling prices of other houses in your neighborhood. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't been reduced by much.
At the point you think you've reached 20 percent equity, you can start the process of freeing yourself from PMI payments. Call your mortgage lender to ask for cancellation of PMI. The lending institution will request proof that your equity is at 20 percent or above. You can acquire documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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