While lending institutions have been legally required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the balance goes below 78% of the price of purchase, they do not have to take similar action if the equity is over 22%. (There are some loans that are not included -like some "high risk' loans.) The good news is that you can cancel your PMI yourself (for a mortgage closing after July '99), no matter the original purchase price, once the equity reaches twenty percent.
Keep a running total of your principal payments. Pay attention to the purchase prices of other homes in your neighborhood. You are paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't gone down much.
As soon as your equity has reached the desired twenty percent, you are close to stopping your PMI payments, once and for all. You will need to contact your lending institution to let them know that you wish to cancel PMI. Next, you will be required to verify that you are eligible to cancel. Most 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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