For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of the purchase amount - but not at the point the borrower achieves 22 percent equity. (There are some exceptions -like a number of "high risk' loans.) However, you can actually cancel PMI yourself (for loans made past July 1999) once your equity rises to 20 percent, without consideration of the original price of purchase.
Analyze your statements often. Also keep track of the price that other homes are selling for in your neighborhood. If your loan is under five years old, it's likely you haven't greatly reduced principal - you have paid mostly interest.
At the point you find you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. Call your lending institution to request cancellation of your Private Mortgage Insurance. Next, you will be required to submit documentation that you are eligible to cancel. You can get documentation of your 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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