For loans closed after July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets under 78 percent of your purchase amount - but not at the point the loan reaches 22 percent equity. (There are some loans that are not included -like some loans considered 'high risk'.) However, you have the right to cancel PMI yourself (for loans made past July 1999) once your equity gets to 20 percent, no matter the original price of purchase.
Keep a running total of money going toward the principal. You'll want to be aware of the the purchase amounts of the houses that sell in your neighborhood. If your loan is under five years old, probably you haven't made much progress with the principal - you have been paying mostly interest.
This is very important!! At the point you find you've achieved at least 20 percent equity, you can begin the process of getting PMI out of your budget. Contact your lending institution to ask for cancellation of PMI. Then you will be required to verify that you have at least 20 percent equity. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
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