Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan closed past July of '99) goes below seventy-eight percent of the purchase price, but not when the loan's equity reaches over twenty-two percent. (Certain "higher risk" morgages are excluded.) However, if your equity rises to 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a loan closed past July 1999).
Keep track of your principal payments. You'll want to stay aware of the prices of the houses that are selling around you. If your loan is under five years old, probably you haven't greatly reduced principal � you have been paying mostly interest.
You can begin the process of PMI cancelation as soon as you you think that your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Next, you will be required to submit proof that you are eligible to cancel. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
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