For loans made after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets lower than 78 percent of your purchase amount � but not at the point the borrower achieves 22 percent equity. (This legal requirment does not cover certain higher risk mortgages.) However, if your equity gets to 20% (regardless of the original purchase price), you have the right to cancel your PMI (for a mortgage closed after July 1999).
Keep a running total of money going toward the principal. Also stay aware of how much other homes are selling for in your neighborhood. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
You can begin the process of PMI cancelation when you're sure your equity reaches 20%. First you will notify your lender that you are requesting to cancel PMI. Then you will be required to submit documentation that you are eligible to cancel. You can acquire documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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