Beginning in 1999, lending institutions have been obligated to cancel a borrower's Private Mortgage Insurance (PMI) at the point his loan balance (for a loan made past July of '99) reaches less than seventy-eight percent of the price of purchase, but not when the loan's equity reaches over twenty-two percent. (The law does not cover a number of higher risk mortgages.) However, you can actually cancel PMI yourself (for mortgages made after July 1999) at the point your equity reaches 20 percent, regardless of the original purchase price.
Review your statements often. Make yourself aware of the selling prices of other houses in your immediate area. If your loan is fewer than five years old, chances are you haven't paid down much principal � it's been mostly interest.
Once your equity has risen to the required twenty percent, you are close to canceling your PMI payments, for the life of your loan. You will first notify your lender that you are asking to cancel PMI. Lenders ask for documentation verifying your eligibility at this point. Most lenders require a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to determine your equity and eligibility for canceling PMI.
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