Beginning in 1999, lending institutions have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of that year) goes down below seventy-eight percent of the price of purchase, but not when the loan's equity reaches twenty-two percent or higher. (This legal requirment does not cover a number of higher risk mortgages.) However, if your equity reaches 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a mortgage loan that after July 1999).
Familiarize yourself with your loan statements to keep a running total of principal payments. Make yourself aware of the prices of other homes in your immediate area. If your loan is fewer than five years old, probably you haven't paid down much principal � you have been paying mostly interest.
You can start the process of PMI cancelation at the time you determine your equity has reached 20%. Call the mortgage lender to ask for cancellation of your PMI. Next, you will be asked to submit proof that you are eligible to cancel. You can acquire proof of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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