The True Cost of PMI: Why you should pay down your low-interest mortgage
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Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#2[deleted]
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#3TL; DR “While paying down a low-interest mortgage might not always make sense, the equation changes when you factor in the cost of private mortgage insurance.”
If you don’t have PMI, the conventional advice stands.
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#4TL; DR “While paying down a low-interest mortgage might not always make sense, the equation changes when you factor in the cost of private mortgage insurance.” If you don’t have PMI, the conventional advice stands.
Also, they’re recommending paying down until you no longer need PMI, not paying off your whole mortgage.
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#5TL; DR “While paying down a low-interest mortgage might not always make sense, the equation changes when you factor in the cost of private mortgage insurance.” If you don’t have PMI, the conventional advice stands.
I don't think this would've ended up on the front page without a contrarian clickbait title.
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#6If your mortgage interest rate is less than inflation, pay as slow as possible and let the inflation eat the principal.
Unless you are paying insurance, in which case the (article’s) argument is that you end up paying more overall.
I have often wondered why high school math does not teach annuities and perpetuities, after all they are something we will absolutely all encounter as a car loan, mortgage or pension.
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#7There are easier ways to do this from the beginning of your loan, like making sure you put 20% down and paying higher closing costs. If you tell your lenders that you refuse to pay PMI my experience has been that one of them will make it work.
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#8If your mortgage interest rate is less than inflation, pay as slow as possible and let the inflation eat the principal. Unless you are paying insurance, in which case the (article’s) argument is that you end up paying more overall. I have often wondered why high school math does not teach annuities and perpetuities, after all they are something we will absolutely all encounter as a car loan, mortgage or pension.
>If your mortgage interest rate is less than inflation, pay as slow as possible and let the inflation eat the principal
I'm not good enough at money math to work out why this makes sense.
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#9>Apply for Removal: You can apply to have PMI removed if you get an appraisal showing that your loan balance is less than 80% of your home’s current value.
>I ruled out option #2 because appraisals are expensive. Spending hundreds of dollars for an appraisal, on top of paying for PMI, felt like throwing good money after bad.
Your mileage may vary, but for myself, in August of 2023 in Raleigh, the property valuation cost was $190. Check with your lender, or shop around for a different valuation company that they accept. My numbers were similar to those of the author: my PMI was $113.83 and my time for loan-to-value to reach 80% was about four years.
What I found was doing the property valuation and then investing the lump sum of cash put me ahead of the 10% 1-year return. The author can now take their $115 monthly savings and invest, but it will never yield nearly as much as investing the $32,000 in even the most conservative scenarios.
You can play around with some various scenarios in a spreadsheet or https://www.investor.gov/financial-tools-calculators/calcula...
Re: The True Cost of PMI: Why you should pay down your low-interest mortgage
#10TL; DR “While paying down a low-interest mortgage might not always make sense, the equation changes when you factor in the cost of private mortgage insurance.” If you don’t have PMI, the conventional advice stands.
I don't think this would've ended up on the front page without a contrarian clickbait title.
If the HN title included the bit of the article title that mentions PMI, it wouldn't be so clickbaity. @dang