For loans closed since July 1999, lenders are required (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78 percent of the purchase amount � but not when the loan reaches 22 percent equity. (A number of "higher risk" mortgage loans are not included.) But if your equity gets to 20% (regardless of the original price of purchase), you have the legal right to cancel PMI (for a loan that after July 1999).
Analyze your monthly statements often. Make yourself aware of the prices of other homes in your neighborhood. Unfortunately, if yours is a recent mortgage loan - five years or under, you likely haven't had a chance to pay very much of the principal: you are paying mostly interest.
Once you find you've achieved at least 20 percent equity in your home, you can start the process of freeing yourself from PMI payments. First you will notify your lender that you are requesting to cancel PMI. Your lender will request proof that your equity is high enough. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) documents your equity amount � and most lenders request one before they'll cancel PMI.
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