PMI Removal Strategy in Today's Market - How I Saved $3,204/Year (With Calculator Too

[Andy Sun]

Hey BP Community,

I wanted to share a strategy that just saved me $3,204/year on my primary residence and could help many of you with your rental properties too. It's about PMI removal in today's stabilized market.

My Situation

I bought my Austin property in March 2023 for $520,000 with 10% down. Like many of you, I was stuck paying $267/month in PMI. I assumed I'd be paying this until 2028 based on my amortization schedule.

Here's what changed: Even though Austin's market has essentially flatlined (only 2.3% appreciation YoY as of September 2025), the combination of my regular payments over 2.5 years plus that modest appreciation pushed my LTV close enough to 80% to take action.

The Current Market Reality (September 2025)

Let's be honest about where we are:

- Austin: Median $555K, up only 2.3% YoY (basically flat)

- Phoenix: Oversupply issues, rents declining

- Tampa: Similar oversupply challenges

- Denver: Still seeing modest growth

- Midwest markets: Best opportunities (Columbus, Kansas City showing 5-7% growth)

With 30-year rates at 6.2-6.3% (just dropped from 6.6% last week), many investors are looking at refinancing. But here's what I discovered: PMI removal might be the better play.

The Math That Made Me Act

My numbers:

- Original loan: $468,000 (90% LTV)

- Current value: ~$530,000 (conservative estimate based on recent comps)

- Current balance: $451,000 (after 2.5 years of payments)

- Current LTV: 85.1%

To get to 80% LTV, I needed my balance at $424,000. That's a $27,000 gap.

Options I considered:

1. Wait it out: Would take another 3.5 years of regular payments

2. Refinance: At 6.2% (current rates) vs my 5.8% - not worth it

3. Lump sum payment: $27,000 to immediately hit 80%

4. Accelerated payments: $1,000/month extra for 27 months

I chose option 3. Here's why:

ROI Analysis:

- Investment: $27,000

- Return: $267/month ($3,204/year)

- Annual ROI: 11.9%

- Better than: Current CD rates (5.2%), stock market uncertainty, bond yields (4.5%)

For Your Rental Properties

This strategy is even more powerful for rentals:

1. PMI is not tax-deductible (unlike mortgage interest)

2. Improved cash flow goes straight to your bottom line

3. Lower LTV** improves your debt-to-income for future acquisitions

Example from a BP member I helped last week:

- Denver rental purchased January 2023: $425,000

- Current value: $455,000 (7% appreciation)

- Current LTV: 81.3%

- Extra payment needed: $7,400

- Monthly PMI eliminated: $195

- Cash-on-cash return improvement: 2.8 percentage points

The Step-by-Step Process

Week 1: Analysis

- Pull your current mortgage balance

- Get realistic property valuation (not Zillow - use recent sold comps)

- Calculate exact LTV

- Determine gap to 80%

Week 2: Decision

- Compare ROI of PMI removal vs other investments

- Check if you have the liquidity

- Consider tax implications

Week 3-4: Execution

- Contact loan servicer IN WRITING

- Request PMI removal requirements

- Make lump sum payment if needed

- Order appraisal if required ($400-600)

Week 5-8: Follow-up

- Weekly check-ins with servicer

- Confirm PMI removal on statement

- Redirect savings to next investment

Important Reminders for September 2025

1. Interest rates just dropped - Biggest single-day drop in over a year on Sept 6

2. Requirements haven't changed: 80% for request, 78% for automatic removal

3. You must be current: No late payments in past 12 months

4. Market-specific: What works in Denver might not work in Austin

My Results

- PMI removed as of September 1, 2025

- Monthly savings: $267

- Annual savings: $3,204

- Funds redirected to: Down payment fund for next rental

Tool I Built

After going through this process, I built a calculator to help analyze these decisions faster. It factors in:

- Current market appreciation rates by city

- PMI costs based on loan amount

- ROI comparison with alternative investments

- Timeline projections

Discussion Questions for the Community

1. Has anyone successfully removed PMI on multiple properties simultaneously?

2. For those in flat markets (Austin, Phoenix), what's your strategy?

3. Anyone negotiated PMI removal below 80% LTV with portfolio lenders?

4. What's your minimum ROI threshold for deploying capital to PMI removal vs new acquisitions?

Key Takeaways

- Even in flat markets, 2-3 years of payments can get you close to 80% LTV

- PMI removal offers guaranteed returns (11-15% in my case)

- The process takes 5-8 weeks but is worth it

- This strategy frees up capital for your next deal

Happy to answer questions about the process or help analyze specific scenarios. The calculator is there if you want to run your own numbers.

Let's keep building wealth intelligently, even in this challenging market.

Best,

Andy Sun

Note: This is not financial advice. Always consult with your CPA and lender about your specific situation. Results will vary based on market conditions and individual circumstances.