Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of that year) reaches less than seventy-eight percent of the purchase price, but not when the loan's equity climbs to more than twenty-two percent. (The legal requirment does not apply to some higher risk mortgages.) But you are able to cancel PMI yourself (for mortgage loans made after July 1999) at the point your equity gets to 20 percent, regardless of the original purchase price.
Familiarize yourself with your loan statements to keep your eye on principal payments. Pay attention to the purchase prices of other houses in your immediate area. Unfortunately, if you have a recent mortgage - five years or fewer, you probably haven't had a chance to pay very much of the principal: you have been paying mostly interest.
You can begin the process of PMI cancelation at the time you determine your equity has reached 20%. Call the mortgage lender to request cancellation of PMI. Next, you will be asked to verify that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and your lender will probably request one before they agree to cancel.
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