For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan gets under 78 percent of the purchase amount � but not at the point the borrower earns 22 percent equity. (There are some exceptions -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed past July '99), no matter the original price of purchase, when the equity gets to twenty percent.
Study your loan statements often. Also be aware of the price that other homes are purchased for in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't greatly reduced principal � it's been mostly interest.
You can start the process of PMI cancelation at the time you're sure your equity has reached 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lenders require proof of eligibility at this point. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and most lenders require one before they'll cancel PMI.
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