Eliminating Private Mortgage Insurance
Although lending institutions have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets below 78% of the purchase price, they do not have to cancel PMI automatically if the borrower's equity is above 22%. (A number of "higher risk" loan programs are not included.) But you have the right to cancel PMI yourself (for mortgage loans made past July 1999) once your equity gets to 20 percent, regardless of the original price of purchase.
Keep a running total of payments
Study your monthly statements often. You'll want to stay aware of the the purchase amounts of the houses that sell around you. Unfortunately, if yours is a recent mortgage loan - five years or fewer, you likely haven't been able to pay a lot of the principal: you are paying mostly interest.
Verify Equity Amount
Once you think you have achieved at least 20 percent equity, you can start the process of getting PMI out of your budget. You will need to notify your mortgage lender that you wish to cancel PMI. The lending institution will ask for proof that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount � and almost all lending institutions require one before they'll cancel PMI.