Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made past July of '99) goes down below seventy-eight percent of the price of purchase, but not at the point the borrower's equity climbs to more than twenty-two percent. (This legal obligation does not cover some higher risk mortgages.) But if your equity rises to 20% (no matter what the original purchase price was), you have the legal right to cancel the PMI (for a mortgage that past July 1999).
Analyze your statements often. Pay attention to the prices of other houses in your neighborhood. If your mortgage is under five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
Once your equity has reached the required twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. Call your lender to ask for cancellation of your PMI. The lending institution will require proof that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
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