Beginning in 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans closed past July of '99) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity gets to over twenty-two percent. (The legal obligation does not include some higher risk mortgages.) The good news is that you can request cancelation of your PMI yourself (for a mortgage closing after July '99), without considering the original purchase price, after your equity reaches twenty percent.
Analyze your monthly statements often. Also be aware of what other homes are selling for in your neighborhood. If your loan is under five years old, chances are you haven't made much progress with the principal � you have paid mostly interest.
You can begin the process of canceling your PMI when you're sure your equity has reached 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lenders request documentation verifying your eligibility at this point. Usually lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
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