Do I pay down my mortgage to remove PMI?
In March 2016, I purchased my first house as a primary residence, this was prior to discovering the Biggerpockets community. I have always wanted to become a real estate investor. But sadly, when I purchased my first house, I did not know much about real estate investing as I do now.
I paid 193k for the property with 5% down on a conventional loan. I have not made any improvement to the home since it was renovated when the property was purchased. Conservatively, the house could appraise for about 200k. My goal was to turn this property into my first rental once I am able to move onto my next property. After listening to the podcast and looking at the numbers, I now know it will not be able to cash flow with the current monthly payment on the property. The question is does it make sense to use my liquid cash to pay down the loan to 80% loan to value to remove the PMI and refinance for a lower monthly payment? Also, with no PMI on the property and the lower payment, will the property cash flow or at least break even with the rent at $1300? This will also allow me to save more due to the lower mortgage payment.
Current Principal Balance
$178,697.60
Current Interest Rate
4.37500%
Payment Amount
$1,170.13
Principal & Interest
$915.44
Property Insurance
$48.83
County Tax
$63.76
Monthly MI amount:
$142.10
Hoa
$65