Removing Private Mortgage Insurance (PMI) when you've put down less than 20% on your home purchase typically involves a series of steps. PMI is designed to protect the lender in case you default on your mortgage payments, and it's usually required when your down payment is less than 20% of the home's purchase price. Once you've built enough equity in your home, you can take measures to have the PMI removed. Here's how:

1. Contact Your Lender: Reach out to your mortgage lender to discuss your goal of removing PMI. They can provide you with the specific requirements and guidelines for PMI removal, as these can vary based on your loan type and the lender's policies.

2. Check Equity: Check the current value of your home and determine how much equity you've built since the purchase. Equity is the difference between the appraised value of your home and the amount you owe on your mortgage.

3. LTV Ratio: LTV stands for Loan-to-Value ratio, which is the ratio of the loan amount to the appraised value of the home. Once your LTV drops below 80% due to a combination of paying down your mortgage and potentially a rise in your home's value, you might be eligible to remove PMI.

4. Home Appraisal: Some lenders may require a new home appraisal to confirm the current value of your property. If your home has appreciated significantly since you purchased it, this could help you reach the 80% LTV threshold sooner.

5. Principal Payments: Accelerate your principal payments to pay down your mortgage faster. This will help you reach the required equity level to remove PMI more quickly.

6. Automatic Termination: According to the Homeowners Protection Act of 1998, lenders are required to automatically terminate PMI when your mortgage balance drops to 78% of the original home value (based on the purchase price), assuming you are current on your payments.

7. Request PMI Removal: If you believe you've reached the 80% LTV mark or if your home's value has increased significantly, you can formally request the removal of PMI. Your lender may have specific paperwork or procedures for this.

8. Lender's Approval: The lender will evaluate your request and might require proof of the increased home value or other documentation. They will assess whether you meet their criteria for PMI removal.

9. Refinancing: Another option is to refinance your mortgage. If you've built up enough equity in your home, you could refinance into a new loan without PMI. However, this involves closing costs and potentially a higher interest rate if market conditions have changed.

Remember that the specific requirements and procedures for PMI removal can vary based on your lender, your loan type, and your local laws. It's essential to communicate with your lender, understand your rights, and gather all necessary documentation to support your request for PMI removal.

Reach out to a loan officer from our team if you have additional questions!