Make Private Mortgage Insurance a Thing of the Past
For loans made since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance gets below 78 percent of your purchase amount � but not when the borrower earns 22 percent equity. (The legal requirment does not include certain higher risk mortgages.) The good news is that you can cancel your PMI yourself (for your loan closing past July '99), regardless of the original price of purchase, when the equity gets to twenty percent.
Keep a running total of payments
Familiarize yourself with your loan statements to keep track of principal payments. Also be aware of how much other homes are being sold for in your neighborhood. You are paying mostly interest if the closing was fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
The Proof is in the Appraisal
You can begin the process of PMI cancelation as soon as you calculate that your equity has reached 20%. Call your mortgage lender to request cancellation of PMI. Lending institutions request paperwork verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.