Since 1999, lenders have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of that year) goes below seventy-eight percent of the purchase price, but not at the time the borrower's equity reaches twenty-two percent or higher. (Certain "higher risk" loans are excluded.) However, if your equity rises to 20% (regardless of the original purchase price), you have the legal right to cancel PMI (for a loan that after July 1999).
Familiarize yourself with your loan statements to keep a running total of principal payments. Also stay aware of how much other homes are purchased for in your neighborhood. If your loan is fewer than five years old, probably you haven't paid down much principal � you have been paying mostly interest.
You can start the process of canceling PMI at the time you determine your equity reaches 20%. First you will let your lending institution know that you are requesting to cancel PMI. Lenders ask for proof of eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
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