Make Private Mortgage Insurance a Thing of the Past
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Although lenders have been required (for loans closed after July 1999) to cancel Private Mortgage Insurance (PMI) when the loan balance goes under 78% of the purchase price, they do not have to cancel PMI automatically if the loan's equity is over 22%. (Some "higher risk" mortgages are excluded.) The good news is that you can request cancellation of your PMI yourself (for your mortgage closing after July '99), without considering the original purchase price, once the equity rises to twenty percent.
Keep a running total of payments
Keep track of each principal payment. Make yourself aware of the purchase prices of other houses in your neighborhood. If your mortgage is fewer than five years old, it's likely you haven't made much progress with the principal - it's been mostly interest.
Verify Equity Amount
As soon as your equity has risen to the required twenty percent, you are close to stopping your PMI payments, for the life of your loan. Contact the lender to request cancellation of your PMI. The lending institution will require proof that your equity is at 20 percent or above. A state certified appraisal documented on the appropriate form (URAR-1004 - Uniform Residential Appraisal Report) verifies your equity amount - and almost all lending institutions will require one before they'll cancel PMI.
