Although lenders have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the loan balance dips under 78% of the price of purchase, they do not have to cancel automatically if the borrower's equity is above 22%. (There are some loans that are not included -like some loans considered 'high risk'.) But you can actually cancel PMI yourself (for mortgages made after July 1999) at the point your equity rises to 20 percent, no matter the original purchase price.
Keep a running total of each principal payment. Also keep track of the price that other homes are selling for in your neighborhood. If your loan is fewer than five years old, probably you haven't greatly reduced principal � it's been mostly interest.
Once your equity has risen to the magic number of twenty percent, you are just a few steps away from stopping your PMI payments, once and for all. You will need to notify your mortgage lender that you wish to cancel PMI. Then you will be asked to submit documentation that you are eligible to cancel. You can get documentation of your home's equity by getting a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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