Although lenders have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets below 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is above 22%. (There are exceptions -like some "high risk' loans.) The good news is that you can request cancellation of your PMI yourself (for your mortgage closing past July '99), regardless of the original purchase price, after the equity gets to twenty percent.
Familiarize yourself with your mortgage statements to keep your eye on principal payments. You'll want to keep track of the prices of the houses that are selling in your neighborhood. Unfortunately, if yours is a new mortgage loan - five years or under, you probably haven't been able to pay very much of the principal: you are paying mostly interest.
You can begin the process of canceling PMI as soon as you're sure your equity reaches 20%. You will first let your lending institution know that you are asking to cancel your PMI. Then you will be required to verify that you have at least 20 percent equity. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) is the best proof there is - and almost all lending institutions request one before they agree to cancel.
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