For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of the purchase amount � but not at the point the loan reaches 22 percent equity. (There are exceptions -like certain "high risk' loans.) But you are able to cancel PMI yourself (for mortgages closed past July 1999) once your equity gets to 20 percent, regardless of the original purchase price.
Analyze your monthly statements often. Also keep track of what other homes are being sold for in your neighborhood. You've been paying mostly interest if your closing was fewer than 5 years ago, so your principal most likely hasn't gone down much.
You can begin the process of PMI cancelation as soon as you're sure your equity has reached 20%. Contact your mortgage lender to ask for cancellation of your Private Mortgage Insurance. Lending institutions request documentation verifying your eligibility at this point. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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