Time to remove PMI?

4 Replies

When does it make financial sense to pay down the mortgage on a rental property enough to get PMI removed? I have a conventional 30 year mortgage with PMI on a SFH that I'm currently renting out. I checked recently and I would be able to get my loan balance down to the 78% LTV threshold required to remove PMI if I made a $13K lump sum payment. With PMI removed, my monthly gross would increase by approx $350. What additional factors should I be considering when deciding whether or not PMI removal is the right choice?

@Jessica Lawrence

If you use ROI as a metric, an additional $350 of cash flow due to removing PMI is a great return. $350 equates to $4200/year that's a 32% return on your cash. In three years all your money is back. Check with your lender the process to end the PMI. The lender most likely require an appraisal. Each lender is different.

@Jessica Lawrence

Look at your mortgage paperwork, but you can also get a reappraisal that will run you a few hundred bucks and if the mortgage is 80% of the currently appraised value it will also be removed. That's going to be your easiest and least costly option, if the value has appreciated enough since purchase and you've held long enough (often there is a 2yr minimum that you must carry the PMI).