Q: I closed on my house in July, 1993. I want to know if I’m at the point at which the lender can automatically drop my private mortgage insurance (PMI). I’ve been told that if I’m at a loan-to-value ratio of 78 percent, or less, PMI can be dropped without refinancing.

A: When you’ve paid down your loan so that you have at least 22 percent equity based on the original sales price (or up to 25 percent if you bought your home within the last 5 years), the lender is supposed to automatically drop your private mortgage insurance (PMI) payments. However, that regulation is only for loans that were completed starting in the late 1990s. Your loan doesn’t qualify.

On the other hand, if you can prove that you have at least that much equity in your home, your lender should be able to drop your PMI payments, without you having to refinance your mortgage.

Give your lender a call and ask what the procedure is to drop PMI. The lender should be able to give you these instructions in writing, although you may have to pay for an appraisal.

But please think about refinancing. Even if you got the lowest interest rate in 1993, which was about 6.5 percent on a 30-year fixed rate loan, you may be able to do a lot better today, because you now have so much in equity. If you refinanced, not only would your loan be reamortized on the much lower balance, but you would stop paying your PMI.

In fact, you may be able to trade your current loan for a 15-year loan or even a 10-year mortgage and still pay exactly what you’re paying now.

I encourage you to shop around for a refinance now, before rates rise any further. I think you could save yourself thousands of dollars and shave years off your mortgage term.

Feb. 28, 2001.