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Although lenders have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the time the balance gets below 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is more than 22%. (The legal obligation does not include some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a loan closing past July '99), without considering the original purchase price, after the equity gets to twenty percent.
Verify the numbers
Analyze your statements often. Also be aware of how much other homes are being sold for in your neighborhood. You've been paying mostly interest if the closing was fewer than 5 years ago, so your principal probably hasn't gone down much.
You can start the process of canceling PMI at the time you're sure your equity has risen to 20%. First you will let your lender know that you are requesting to cancel your PMI. Next, you will be asked to submit proof that you are eligible to cancel. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount - and your lender will probably request one before they agree to cancel.
eMortgage Bankers can help find out if you can eliminate your PMI. Give us a call at (305) 596-7672.