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Pay off PMI or Car Loans?

Started by VpR111, November 08, 2018, 05:58:13 AM

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Good morning all,

Wanted to get any reader thoughts about paying off PMI vs remaining car loans. Situation is:
Mortgage balance 400k @ 3.37%, original purchase price 440k, current home value estimated between 485-500, PMI is currently 209/mo
Remaining balances on two car loans @ 1.9%, 16k

We currently cashflow ~2k/mo after savings and everything, have emergency funds, and don't qualify for roth IRA contributions. I'm trying to decide between paying down the mortgage by 20k and getting a new appraisal, or paying off both cars in the coming months.

My initial thoughts are to get rid of the PMI, but would love to hear what others think. And to throw a curveball into the calcs...if the Amazon HQ2 rumors become true for NoVA, the new facility would be bikeable to my house, which might increase the price enough to re-appraise away PMI without payments (although the demand might take a few years to materialize)

Thanks all!


$20k would save you $209/mo on PMI.  That seems like a MUCH better return than the 1.9% car loans.  You are paying $2,500/year for PMI that $20k would eliminate.  So I would figure that as a 12% ROI vs 1.9%.  No brainer.


Good point. Plus, it would save on total interest.


And the total interest is much higher than 1.9%, too :)

I imagine the car loans would free up more cash flow, however.  So that is something to consider, too.


Pay the mortgage loan down to get to the point where you are released from PMI.  Any payment goes into your home equity, which in a pinch you could tap on a Home equity line if you had to.  Then take really good care of the cars and keep them much longer than the length of the car note.  If you figure that PMI premium as a cost of money (which it is) it is a much higher rate than the car loan.  And pay for the appraisal, too.  Then you might not have to put as much down to releas the PMI.


Pay down the mortgage to get rid of the PMI. You don't seem to have a cash flow issue, so paying down the car loan first is unjustified.

And don't rely on the HQ2 thing to bring up the value - that will take years to come to fruition. Just knock it off now.

After the PMI is gone, I wouldn't go after the car loans........that interest rate is really low. I'm sure there are better uses for the funds


Thanks all for your inputs. We've decided to attack the mortgage and get it low enough that I'd feel comfortable paying for a re-appraisal to remove PMI.