While lending institutions have been required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) at the time the mortgage balance dips below 78% of the price of purchase, they do not have to take similar action if the loan's equity is over 22%. (Certain "higher risk" loans are not included.) The good news is that you can cancel your PMI yourself (for a loan that closed after July '99), without considering the original price of purchase, after your equity gets to twenty percent.
Review your statements often. Also be aware of the price that other homes are selling for in your neighborhood. You've been paying mostly interest if your mortgage loan closed fewer than 5 years ago, so your principal probably hasn't lowered much.
You can begin the process of canceling your PMI as soon as you're sure your equity has risen to 20%. Call your lending institution to ask for cancellation of PMI. Then you will be required to verify that you have at least 20 percent equity. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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