Since 1999, lenders have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) reaches less than seventy-eight percent of the price of purchase, but not at the time the borrower's equity gets to twenty-two percent or more. (There are some exceptions - like FHA loans.) However, you have the right to cancel PMI yourself (for mortgages closed after July 1999) at the point your equity rises to 20 percent, no matter the original price of purchase.
Review your monthly statements often. You'll want to stay aware of the the purchase prices of the houses that are selling around you. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
Once you think you've achieved at least 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. First you will let your lender know that you are requesting to cancel PMI. The lending institution will require proof that your equity is high enough. You can acquire documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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