Since 1999, lenders have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his mortgage balance (for a loan made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the borrower's equity climbs to twenty-two percent or higher. (Certain "higher risk" mortgage loans are excluded.) But if your equity rises to 20% (regardless of the original purchase price), you can cancel PMI (for a loan that after July 1999).
Keep a running total of money going toward the principal. Also be aware of how much other homes are selling for in your neighborhood. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
You can begin the process of PMI cancelation at the time you calculate that your equity has reached 20%. Call your mortgage lender to ask for cancellation of PMI. Then you will be asked to verify that you have at least 20 percent equity. A state certified appraisal using the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) will document your equity amount � and your lender will probably request one before they agree to cancel PMI.
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