While lenders have been obligated (for loans closed past July '99) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance gets under 78% of the price of purchase, they do not have to take similar action if the loan's equity is more than 22%. (This law does not include certain higher risk mortgages.) However, if your equity gets to 20% (regardless of the original purchase price), you can cancel your PMI (for a loan that after July 1999).
Familiarize yourself with your mortgage statements to keep track of principal payments. Also be aware of the price that other homes are purchased for in your neighborhood. You are paying mostly interest if your loan closed fewer than 5 years ago, so your principal probably hasn't lowered much.
At the point your equity has reached the magic number of twenty percent, you are not far away from getting rid of your PMI payments, once and for all. Call your lender to ask for cancellation of PMI. Lenders require documentation verifying your eligibility at this point. Usually lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your equity and eligibility for PMI cancellation.
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