For loans closed since July 1999, lenders are obligated (by federal law) to automatically cancel Private Mortgage Insurance (PMI) when the balance of the loan falls below 78 percent of your purchase price - but not when the loan reaches 22 percent equity. (There are some loans that are not covered by this law -like a number of "high risk' loans.) However, if your equity reaches 20% (no matter what the original purchase price was), you have the legal right to cancel PMI (for a loan that past July 1999).
Familiarize yourself with your mortgage statements to keep your eye on principal payments. Also be aware of the price that other homes are being sold for in your neighborhood. If your mortgage is under five years old, probably you haven't greatly reduced principal - it's been mostly interest.
You can start the process of canceling your PMI as soon as you're sure your equity reaches 20%. You will need to notify your mortgage lender that you wish to cancel PMI payments. Lending institutions request proof of eligibility at this point. The best proof there is can be found in a state certified appraisal on form URAR-1004 (Uniform Residential Appraisal Report), which is required by most lending institutions before canceling PMI.
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