Make Private Mortgage Insurance a Thing of the Past
Beginning in 1999, lenders have been legally obligated to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans closed past July of '99) goes down below seventy-eight percent of the purchase price, but not at the time the borrower's equity climbs to more than twenty-two percent. (Some "higher risk" morgages are excluded.) But if your equity reaches 20% (no matter what the original purchase price was), you can cancel PMI (for a mortgage loan that after July 1999).
Verify the numbers
Keep a running total of your principal payments. Make yourself aware of the purchase prices of other homes in your immediate area. If your mortgage is under five years old, it's likely you haven't made much progress with the principal � it's been mostly interest.
Verify Equity Amount
You can begin the process of PMI cancelation as soon as you're sure your equity has risen to 20%. You will need to notify your mortgage lender that you want to cancel PMI. The lending institution will request documentation that your equity is at 20 percent or above. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your home's equity and eligibility for PMI cancellation.