Is PMI a better choice in a low interest rate environment?
I've been looking at investing in my first small multifamily property with 20% down, but recently started exploring putting 15% down in order to hold on to more cash (to invest in my next property) and pay the PMI (or MIP). Given interest rates are at historic lows, how do you think about the decision to pay MI? Any good calculators to weigh my options?
It seems like I should be optimizing for using the least amount of my own cash as I can (while holding on to a good chunk of equity) and finding ways to earn a greater return with that cash than the MI.
More details:
- I have very strong credit
- I plan to hold the property for a long time (20-30 years)
- The property would be in a high appreciating but low cash flow market
- I would be owner-occupying
- It looks like if I go the FHA+MIP route, I'd save 0.50% on the interest rate