While lenders have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is over 22%. (Certain "higher risk" loans are not included.) But if your equity rises to 20% (no matter what the original price was), you are able to cancel your PMI (for a mortgage loan closed past July 1999).
Familiarize yourself with your mortgage statements to keep track of principal payments. Also be aware of what other homes are purchased for in your neighborhood. If your loan is fewer than five years old, chances are you haven't paid down much principal � you have been paying mostly interest.
You can start the process of PMI cancelation as soon as you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI. Lenders ask for proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
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