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While lending institutions have been legally required (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the balance goes below 78% of the purchase price, they do not have to cancel automatically if the loan's equity is more than 22%. (A number of "higher risk" mortgage loans are excluded.) However, if your equity reaches 20% (no matter what the original purchase price was), you are able to cancel your PMI (for a mortgage that after July 1999).
Keep a record of payments
Keep a running total of your principal payments. Also be aware of what other homes are selling for in your neighborhood. If your mortgage is fewer than five years old, chances are you haven't made much progress with the principal - you have paid mostly interest.
The Proof is in the Appraisal
You can begin the process of PMI cancellation when you're sure your equity reaches 20%. Call your lender to request cancellation of your PMI. Your lender will ask for documentation that your equity is high enough. You can acquire proof of your equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
At Gold Medal Mortgage, Inc., we answer questions about PMI every day. Give us a call at 440-934-2100.