Although lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets below 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is over 22%. (There are some exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your mortgage closing after July '99), regardless of the original purchase price, after the equity reaches twenty percent.
Study your mortgage statements often. Also stay aware of the price that other homes are selling for in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't been reduced by much.
At the point you determine you have reached 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. Contact the lender to ask for cancellation of your Private Mortgage Insurance. The lending institution will require documentation that your equity is high enough. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for PMI cancellation.
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