I am at a bit of an impasse with my math skills and also wanting to be sure that I take everything into account, so I’d love some insight into seeing what the difference would be between getting the PMI off of our house (currently $50/month) or investing the amount we would have to put into our house instead into the stock market. The figures:
30 yr. fixed rate mortgage, 3.75% interest rate, original sale price 122,500. Financed 116,500. First loan payment was July 2015. Currently sitting at $112, 763 still owed. Not sure if 80% suffices to remove PMI, or if it will be 78%. Let’s assume 7% market return, and that we’ll be making $1,000/month in extra payments.
What I’m trying to gauge is whether we would be better off, money-wise, to go ahead and put in the roughly $14,000 this year to remove the PMI from the house, or whether we’d be better off to invest that cash and keep taking the $600 annual PMI hit until December 2023, when the loan would finally cross the PMI removal threshold. There are several moving parts that have me stumped about how to completely perform the calculation with any accuracy. Anyone have assistance?