Since 1999, lending institutions have been required to cancel a borrower's Private Mortgage Insurance (PMI) when his loan balance (for loans made after July of that year) goes down below seventy-eight percent of the purchase price, but not at the point the borrower's equity climbs to twenty-two percent or higher. (There are some loans that are excluded -like a number of "high risk' loans.) However, you have the right to cancel PMI yourself (for mortgage loans made past July 1999) at the point your equity reaches 20 percent, without consideration of the original purchase price.
Familiarize yourself with your loan statements to keep track of principal payments. Make yourself aware of the prices of other homes in your neighborhood. You've been paying mostly interest if your mortgage closed fewer than 5 years ago, so your principal probably hasn't lowered much.
When you determine you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. Call the lending institution to request cancellation of your PMI. Lending institutions request proof of eligibility at this point. 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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