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Although lenders have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) when the balance dips below 78% of the purchase price, they do not have to cancel PMI automatically if the equity is over 22%. (A number of "higher risk" loan programs are excluded.) However, you are able to cancel PMI yourself (for mortgage loans made after July 1999) once your equity gets to 20 percent, without consideration of the original purchase price.
Verify the numbers
Familiarize yourself with your mortgage statements to keep track of principal payments. Also be aware of the price that other homes are being sold for in your neighborhood. Unfortunately, if yours is a recent loan - five years or under, you likely haven't begun to pay a lot of the principal: you are paying mostly interest.
At the point your equity has risen to the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will need to contact the lending institution to let them know that you wish to cancel PMI payments. The lending institution will require documentation that your equity is at 20 percent or above. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need - and your lender will probably require one before they'll cancel PMI.
Allstar Brokers Network DBA InnoDuet can help find out if you can eliminate your PMI. Give us a call at 800-998-6003.