Although lending institutions have been obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes below 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is more than 22%. (There are exceptions -like a number of "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage that closed past July '99), no matter the original price of purchase, once your equity climbs to twenty percent.
Review your statements often. Also be aware of what other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you likely haven't started to pay a lot of the principal: you have been paying mostly interest.
You can begin the process of canceling PMI as soon as you you think that your equity has risen to 20%. Contact your mortgage lender to request cancellation of your Private Mortgage Insurance. Your lender will require proof that your equity is high enough. You can get proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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