Since 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made past July of '99) goes beneath seventy-eight percent of the price of purchase, but not at the time the loan's equity reaches twenty-two percent or more. (There are some exceptions -like certain "high risk' loans.) But if your equity rises to 20% (no matter what the original purchase price was), you are able to cancel the PMI (for a loan that after July 1999).
Keep track of each principal payment. Find out the prices of other houses in your neighborhood. Unfortunately, if you have a new mortgage - five years or under, you probably haven't begun to pay much of the principal: you have been paying mostly interest.
You can begin the process of canceling your PMI at the time you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lending institutions request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lending institutions before canceling PMI.
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