Goodbye, PMI!
For loans made since July 1999, lending institutions are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan goes below 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (A number of "higher risk" mortgage loans are not included.) The good news is that you can cancel your PMI yourself (for your mortgage loan that closed after July '99), regardless of the original purchase price, after your equity rises to twenty percent.
Keep a record of payments
Study your mortgage statements often. Also stay aware of the price that other homes are being sold for in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't lowered much.
Verify Equity Amount
At the point your equity has reached the desired twenty percent, you are close to canceling your PMI payments, for the life of your loan. First you will tell your lender that you are asking to cancel PMI. Then you will be asked to verify that you are eligible to cancel. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and your lender will probably request one before they agree to cancel PMI.