While lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) when the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is over 22%. (Certain "higher risk" loan programs are excluded.) However, you can actually cancel PMI yourself (for loans closed after July 1999) at the point your equity gets to 20 percent, no matter the original price of purchase.
Analyze your statements often. Pay attention to the prices of other homes in your immediate area. Unfortunately, if you have a recent mortgage - five years or fewer, you likely haven't been able 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 begin the process of canceling your Private Mortgage Insurance. Call your lender to request cancellation of PMI. Your lender will request documentation that your equity is high enough. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
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