Although lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance goes under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is over 22%. (A number of "higher risk" loans are excluded.) The good news is that you can cancel your PMI yourself (for your mortgage that closed past July '99), regardless of the original purchase price, after your equity gets to twenty percent.
Study your statements often. Find out the purchase prices of other homes in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
At the point your equity has reached the required twenty percent, you are close to getting rid of your PMI payments, once and for all. You will first notify your lender that you are asking to cancel PMI. Next, you will be asked to submit proof that you are eligible to cancel. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.
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