Although lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance gets under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is more than 22%. (A number of "higher risk" morgages are not included.) The good news is that you can cancel your PMI yourself (for your loan closing past July '99), no matter the original purchase price, after the equity rises to twenty percent.
Keep track of money going toward the principal. Pay attention to the prices of other houses in your neighborhood. Unfortunately, if yours is a new mortgage - five years or under, you likely haven't begun to pay a lot of the principal: you have been paying mostly interest.
When you determine you have reached 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be asked to submit proof that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will be all the proof you need � and your lender will probably require one before they agree to cancel.
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