Beginning in 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) at the point his mortgage balance (for loans made after July of '99) goes below seventy-eight percent of the purchase price, but not at the time the borrower's equity gets to twenty-two percent or higher. (There are some loans that are not covered by this law -like some loans considered 'high risk'.) However, you are able to cancel PMI yourself (for mortgages made after July 1999) when your equity gets to 20 percent, without consideration of the original purchase price.
Study your statements often. Make yourself aware of the selling prices of other houses in your neighborhood. If your loan is fewer than five years old, chances are you haven't made much progress with the principal � it's been mostly interest.
When you find you've reached 20 percent equity in your home, 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 payments. Your lender will ask for documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for canceling PMI.
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