While lenders have been legally required (for loans closed past July 1999) to cancel Private Mortgage Insurance (PMI) when the balance goes below 78% of the price of purchase, they do not have to cancel PMI automatically if the equity is above 22%. (There are exceptions -like some loans considered 'high risk'.) However, if your equity reaches 20% (regardless of the original purchase price), you have the right to cancel the PMI (for a mortgage that past July 1999).
Do your homework
Review your monthly statements often. You'll want to stay aware of the the purchase amounts of the homes that are selling around you. You've been paying mostly interest if you closed your loan fewer than 5 years ago, so your principal most likely hasn't been reduced by much.
The Proof is in the Appraisal
As soon as your equity has risen to the desired twenty percent, you are just a few steps away from stopping your PMI payments, for the life of your loan. First you will tell your lender that you are asking to cancel your PMI. The lending institution will request documentation that your equity is at 20 percent or above. Most lenders ask for a state certified appraisal documented on the form: URAR-1004 (Uniform Residential Appraisal Report) to verify your home's equity and eligibility for PMI cancellation.
Tier One Mortgage, LLC can answer questions about PMI and many others. Call us at (585) 282-0960.