Good point about checking with your lender first, but keep in mind not all lenders make PMI removal that straightforward. I've seen cases where the appraisal comes back lower than expected, dragging out the process...sometimes refinancing can still be worth considering despite higher rates.
That's definitely true about appraisals being a wildcard. I've had a couple of properties where the appraisal came in surprisingly low, and it threw off the entire PMI removal calculation. Even though the market seemed strong, the appraiser just wasn't on the same page... super frustrating.
Refinancing can sometimes be worth it, even with higher rates, but I'd say it really depends on your timeline and goals. If you plan on staying put for a long time, then yeah, refinancing could make sense—especially if your lender is making PMI removal a nightmare. On the flip side, if you're planning to move or sell soonish, refinancing might cost you more in closing costs and higher interest than you'd save by ditching PMI.
One alternative I've personally used is paying down the principal balance strategically to hit that 78%-80% threshold faster. Yeah, it's a chunk of cash upfront, but if you're close enough anyway and don't want to roll the dice with an appraisal or refinance fees, it's worth crunching the numbers. I did this once when an appraisal was shaping up to be borderline... I figured I'd rather put extra money towards equity than risk getting stuck paying PMI longer.
Also, just to throw another wrinkle into the mix: some lenders have pretty rigid rules about seasoning periods—meaning you can't even request PMI removal until you've had the loan for a certain amount of time (often two years). Learned that one the hard way on an investment property.
Bottom line: PMI removal isn't always as straightforward as lenders like to advertise, and refinancing isn't always a no-brainer either. Definitely run all your scenarios through a good mortgage calculator and consider how long you'll realistically hold onto the property before pulling the trigger.
Good points all around. I've also found lenders aren't always transparent about the PMI removal criteria upfront, so you're left guessing until you actually request it. I've never tried the strategic principal paydown myself, but it makes sense if you're close enough. Curious though, has anyone had luck challenging a low appraisal successfully? Seems like a long shot, but maybe worth trying before putting extra cash toward principal...
I haven't personally challenged an appraisal, but my neighbor did last year when refinancing. He gathered recent comps himself and pointed out some upgrades the appraiser missed. It didn't completely flip the appraisal, but he did get a decent bump—enough to make PMI removal doable without extra principal payments. Might be worth a shot if you think the appraisal overlooked something obvious. Have you checked recent sales nearby to see if there's a solid case?
Challenging an appraisal isn't rocket science, but it does take a bit of homework. First, grab recent comps—ideally within the last 3-6 months and close to your home. Next, clearly highlight any upgrades or improvements the appraiser overlooked (new roof, kitchen remodel, etc.). Then, submit your appeal directly to your lender with clear documentation. It won't always swing things dramatically, but even a modest bump can help ditch that annoying PMI sooner...and who doesn't want to save a few bucks each month?
