Although lenders have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the equity is above 22%. (There are some exceptions -like some "high risk' loans.) However, if your equity reaches 20% (regardless of the original purchase price), you have the legal right to cancel your PMI (for a mortgage that past July 1999).
Keep a running total of your principal payments. Make yourself aware of the prices of other homes in your neighborhood. If your mortgage is fewer than five years old, probably you haven't paid down much principal - it's been mostly interest.
You can begin the process of canceling your PMI as soon as you calculate that your equity has reached 20%. First you will notify your lender that you are asking to cancel your PMI. Your lender will require documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.
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