While lending institutions have been obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the mortgage balance gets under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is over 22%. (The legal requirment does not apply to some higher risk mortgages.) But you are able to cancel PMI yourself (for mortgages made past July 1999) at the point your equity gets to 20 percent, no matter the original purchase price.
Keep track of your principal payments. You'll want to keep track of the the purchase amounts of the houses that are selling around you. If your loan is under five years old, probably you haven't greatly reduced principal � you have paid mostly interest.
At the point your equity has reached the desired twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. You will need to notify your mortgage lender that you want to cancel PMI payments. Next, you will be asked to verify that you are eligible to cancel. 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 lending institutions before canceling PMI.
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