Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan closed after July of '99) goes under seventy-eight percent of the purchase price, but not when the loan's equity gets to higher than twenty-two percent. (Some "higher risk" loan programs are not included.) The good news is that you can request cancelation of your PMI yourself (for your mortgage loan that closed past July '99), no matter the original purchase price, at the point your equity climbs to twenty percent.
Familiarize yourself with your monthly statements to keep track of principal payments. Pay attention to the selling prices of other houses in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal � it's been mostly interest.
When you think you have reached 20 percent equity, you can start the process of getting PMI out of your budget. You will first notify your lender that you are asking to cancel PMI. Lending institutions ask for 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), which is required by most lenders before canceling PMI.
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