Make Private Mortgage Insurance a Thing of the Past
For loans closed after July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance falls below 78 percent of the purchase amount � but not when the borrower achieves 22 percent equity. (A number of "higher risk" loan programs are not included.) But if your equity rises to 20% (no matter what the original purchase price was), you have the right to cancel PMI (for a mortgage that past July 1999).
Keep a running total of payments
Familiarize yourself with your monthly statements to keep a running total of principal payments. Also keep track of how much other homes are purchased for in your neighborhood. Unfortunately, if you have a recent mortgage loan - five years or under, you probably haven't been able to pay very much of the principal: you have been paying mostly interest.
Verify Equity Amount
Once your equity has reached the magic number of twenty percent, you are not far away from stopping your PMI payments, for the life of your loan. First you will let your lender know that you are requesting to cancel your PMI. The lending institution will ask for documentation that your equity is high enough. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is all the proof you need � and almost all lenders will require one before they agree to cancel PMI.