Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for a loan made after July of that year) goes below seventy-eight percent of the price of purchase, but not at the point the loan's equity reaches over twenty-two percent. (There are some exceptions -like some loans considered 'high risk'.) But if your equity reaches 20% (no matter what the original price was), you can cancel your PMI (for a mortgage that after July 1999).
Study your statements often. You'll want to keep track of the the purchase amounts of the houses that are selling in your neighborhood. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal probably hasn't lowered much.
You can begin the process of canceling your PMI at the time you're sure your equity has reached 20%. First you will notify your lender that you are asking to cancel your PMI. Lending institutions ask for proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions require one before they'll cancel PMI.
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