Although lending institutions have been legally obligated (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) at the point the mortgage balance gets below 78% of the purchase price, they do not have to take similar action if the borrower's equity is above 22%. (There are some exceptions -like a number of "high risk' loans.) But you have the right to cancel PMI yourself (for loans closed after July 1999) when your equity reaches 20 percent, regardless of the original purchase price.
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Find out the selling prices of other homes in your immediate area. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
At the point you think you've reached 20 percent equity, you can begin the process of getting PMI out of your budget. You will need to notify your mortgage lender that you want to cancel PMI. The lending institution will ask for documentation that your equity is high enough. The best proof there is can be found in a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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