Canceling Private Mortgage Insurance
While lenders have been legally obligated (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets under 78% of the price of purchase, they do not have to cancel automatically if the equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) The good news is that you can request cancelation of your PMI yourself (for your loan that closed past July '99), no matter the original purchase price, when the equity reaches twenty percent.
Keep a running total of payments
Familiarize yourself with your loan statements to keep track of principal payments. You'll want to stay aware of the prices of the homes that are selling in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal most likely hasn't gone down much.
Proof of Equity
Once you think you have achieved at least 20 percent equity in your home, you can begin the process of canceling your Private Mortgage Insurance. First you will notify your lender that you are asking to cancel your PMI. Lending institutions require proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.