Although lending institutions have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the balance dips under 78% of the price of purchase, they do not have to take similar action if the loan's equity is more than 22%. (There are some loans that are excluded -like some loans considered 'high risk'.) But you have the right to cancel PMI yourself (for mortgages closed past July 1999) when your equity gets to 20 percent, without consideration of the original purchase price.
Keep track of money going toward the principal. You'll want to stay aware of the prices of the homes that sell around you. You've been paying mostly interest if you closed your mortgage fewer than 5 years ago, so your principal probably hasn't been reduced by much.
At the point you find you have achieved at least 20 percent equity, you can start the process of freeing yourself from PMI payments. Contact your lending institution to ask for cancellation of PMI. Next, you will be required to submit documentation that you have at least 20 percent equity. You can acquire proof of your home's equity by getting a state certified appraisal using form URAR-1004 (Uniform Residential Appraisal Report), required by most lenders before canceling PMI.
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