Although lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets below 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (Some "higher risk" mortgage loans are not included.) However, you have the right to cancel PMI yourself (for mortgages made after July 1999) at the point your equity rises to 20 percent, no matter the original price of purchase.
Review your mortgage statements often. You'll want to stay aware of the prices of the houses that sell in your neighborhood. You are paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't lowered much.
When you find you've achieved at least 20 percent equity, you can start the process of canceling your Private Mortgage Insurance. You will need to contact the lending institution to alert them that you want to cancel PMI. Lending institutions request paperwork verifying your eligibility at this point. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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