Private Mortgage Insurance or PMI is determined at loan initiation and remains constant until it gets cancelled at a 78% LTV ratio. If you’re close to that limit, e.g. 85% or 82% LTV, etc., put in the funds to reach the goal of 80% LTV for refinancing the loan or 78% for waiver with current lender. As you get closer to the waiver LTV ratio, the relative cost of PMI grows, e.g. $75 a month PMI on $10,000 needed to reach 78% LTV equates to a 9% annualized cost,e.g. $900 divided by $10,000. If there is $5,000 left, the $75 a month is now an 18% annualized cost. You also avoid paying interest on the principal you’ve paid off, e.g. 4% mortgage interest, so that $5,000 is now worth a 22% cost savings. Dollars saved are dollars earned.


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