For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (There are exceptions -like a number of "high risk' loans.) However, you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity rises to 20 percent, no matter the original purchase price.
Study your statements often. Also keep track of how much other homes are selling for in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
When you think you've achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. Call your lender to request cancellation of PMI. The lending institution will request proof that your equity is high enough. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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