While lending institutions have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the point the balance goes under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (The law does not include a number of higher risk mortgages.) However, if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel your PMI (for a mortgage loan closed past July 1999).
Familiarize yourself with your mortgage statements to keep a running total of principal payments. Find out the selling prices of other houses in your immediate area. If your mortgage is under five years old, probably you haven't paid down much principal � you have paid mostly interest.
Once your equity has reached the desired twenty percent, you are not far away from canceling your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be required to submit proof that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and your lender will probably require one before they agree to cancel.
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