Although lenders have been legally obligated (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips under 78% of the price of purchase, they do not have to take similar action if the loan's equity is above 22%. (There are some loans that are excluded -like certain "high risk' loans.) However, if your equity reaches 20% (regardless of the original price of purchase), you have the legal right to cancel the PMI (for a mortgage loan that past July 1999).
Keep a running total of money going toward the principal. You'll want to stay aware of the the purchase prices of the houses that are selling around you. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
You can begin the process of canceling PMI at the time you calculate that your equity has reached 20%. Call the lender to ask for cancellation of PMI. The lending institution will request proof that your equity is high enough. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for canceling PMI.
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