Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for loans made past July of '99) goes under seventy-eight percent of the purchase price, but not when the borrower's equity reaches twenty-two percent or higher. (This legal obligation does not apply to some higher risk mortgages.) However, if your equity gets to 20% (no matter what the original price was), you are able to cancel PMI (for a mortgage loan that after July 1999).
Keep track of your principal payments. Also be aware of what other homes are purchased for in your neighborhood. Unfortunately, if yours is a recent mortgage - five years or under, you likely haven't begun to pay very much of the principal: you have been paying mostly interest.
At the point your equity has risen to the desired twenty percent, you are close to stopping your PMI payments, for the life of your loan. First you will notify your lender that you are requesting to cancel PMI. Lenders require proof of eligibility at this point. Most lenders require 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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