Although lending institutions have been legally required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the time the loan balance goes under 78% of the price of purchase, they do not have to cancel automatically if the loan's equity is more than 22%. (This legal obligation does not apply to some higher risk mortgages.) The good news is that you can cancel your PMI yourself (for a mortgage loan that closed after July '99), regardless of the original purchase price, once the equity rises to twenty percent.
Keep a running total of your principal payments. You'll want to keep track of the prices of the houses that are selling around you. If your loan is under five years old, chances are you haven't made much progress with the principal - you have paid mostly interest.
At the point you think you've reached 20 percent equity, you can start the process of freeing yourself from PMI payments. Call your mortgage lender to ask for cancellation of PMI. Lending institutions request paperwork verifying your 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 lending institutions before canceling PMI.