Beginning in 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of that year) reaches less than seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to higher than twenty-two percent. (There are exceptions -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed past July '99), without considering the original purchase price, once your equity reaches twenty percent.
Review your statements often. Also be aware of the price that other homes are selling for in your neighborhood. Unfortunately, if you have a recent loan - five years or under, you probably haven't had a chance to pay very much of the principal: you have been paying mostly interest.
At the point you think you've achieved at least 20 percent equity in your home, you can start the process of canceling your Private Mortgage Insurance. Call your lender to request cancellation of your Private Mortgage Insurance. Lenders require proof of eligibility at this point. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is � and most lending institutions request one before they'll cancel PMI.
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