Although lending institutions have been required (for loans closed after July '99) to cancel Private Mortgage Insurance (PMI) at the point the loan balance goes below 78% of the price of purchase, they do not have to cancel automatically if the equity is more than 22%. (There are some exceptions -like certain "high risk' loans.) The good news is that you can request cancelation of your PMI yourself (for a loan that closed after July '99), no matter the original purchase price, when your equity gets to twenty percent.
Study your monthly statements often. Also be aware of how much other homes are selling for in your neighborhood. Unfortunately, if yours is a recent loan - five years or fewer, you likely haven't had a chance to pay much of the principal: you are paying mostly interest.
Once you find you have reached 20 percent equity, you can begin the process of freeing yourself from PMI payments. You will need to call your mortgage lender to alert them that you wish to cancel PMI. Lenders ask for 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), required by most lenders before canceling PMI.
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