For loans made after July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets lower than 78 percent of the purchase price � but not at the point the borrower earns 22 percent equity. (There are some loans that are excluded -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for loans closed after July 1999) once your equity rises to 20 percent, no matter the original price of purchase.
Analyze your statements often. Also stay aware of the price that other homes are selling for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you probably haven't had a chance to pay a lot of the principal: you are paying mostly interest.
Once your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will need to call your lending institution to alert them that you want to cancel PMI. Lending institutions require documentation verifying your eligibility at this point. You can get documentation of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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