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Beginning in 1999, lending institutions have been legally required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for a loan closed past July of '99) goes down below seventy-eight percent of the purchase price, but not at the point the loan's equity climbs to twenty-two percent or higher. (Some "higher risk" loans are excluded.) The good news is that you can request cancellation of your PMI yourself (for your mortgage that closed past July '99), no matter the original price of purchase, when your equity rises to twenty percent.
Keep a record of payments
Study your statements often. You'll want to stay aware of the the purchase amounts of the homes that sell in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't lowered much.
Verify Equity Amount
Once you think you've reached 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. First you will tell your lender that you are requesting to cancel your PMI. Next, you will be asked to verify that you have at least 20 percent equity. Most 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.