Make Private Mortgage Insurance a Thing of the Past
Although lending institutions have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the loan balance gets under 78% of the purchase price, they do not have to cancel automatically if the loan's equity is over 22%. (The legal obligation does not cover some higher risk mortgages.) However, if your equity gets to 20% (no matter what the original price was), you can cancel PMI (for a mortgage loan closed past July 1999).
Keep a running total of payments
Familiarize yourself with your loan statements to keep your eye on principal payments. You'll want to keep track of the prices of the homes that sell around you. You've been paying mostly interest if your loan closed fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
Proof of Equity
At the point your equity has risen to the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will first let your lending institution know that you are asking to cancel your PMI. Then you will be required to verify that you are eligible to cancel. You can get documentation of your equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.