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Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan closed past July of '99) goes below seventy-eight percent of the purchase price, but not at the point the loan's equity gets to higher than twenty-two percent. (The law does not cover certain higher risk mortgages.) But you have the right to cancel PMI yourself (for loans closed after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.
Keep track of payments
Review your statements often. You'll want to stay aware of the the purchase prices of the homes that sell in your neighborhood. If your loan is under five years old, probably you haven't greatly reduced principal - it's been mostly interest.
Once your equity has reached the magic number of twenty percent, you are just a few steps away from canceling your PMI payments, once and for all. Call the mortgage lender to request cancellation of your PMI. Next, you will be required to verify that you are eligible to cancel. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lenders before canceling PMI.
At Sierra Pacific Mortgage, we answer questions about PMI every day. Call us at (888) 888-1172.