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  #1  
Old 05-04-2016, 02:12 PM
chb chb is offline
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Default Better to pay off debt or pay additional to mortgage to get rid of PMI

I have several outstanding debts I'm trying to pay off in addition to my mortgage. Trying to decide which plan of attack makes the most financial sense.

Outstanding Debt:

Credit card $ 6500 introductory interest rate of 0% until June of 2017
Loan $24500 interest rate of 2%

Mortgage interest rate of 3.85%
currently paying $100/mo for PMI.
current LTV is 87%. I have to pay off about 9K to
request PMI be removed.

I'm going to have anywhere between $500-800 a month to put towards paying off additional debt (this is in addition to minimum monthly payment and mortgage).

I'm trying to figure out if it makes more sense to pay off the debt and be clear of that or to pay extra towards the mortgage to get the PMI removed sooner.

Advice?
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  #2  
Old 05-04-2016, 07:04 PM
Here2help Here2help is offline
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Default Re: Better to pay off debt or pay additional to mortgage to get rid of PMI

I'd say pay your mortgage first. Here's why...

6500@25% interest = 135/mo
24500@2% = 40.83/mo
Mortgage = $100/mo extra

Assuming you only put in 500/mo extra to one.

6500/500= 13 months
9000/500 = 18 months

If you start with mortgage first you'll have 6 month of CC interest payments = $810 before you'll save the $100/mo to put towards the CC. This will make your net bills only $35/mo more.

If you pay the CC first you'll have paid $1435 in PMI with 1mo CC interest + you still have 18 months to get to the 9K to lose your PMI.

Just make sure that you check with your CC if you still have a balance after June 2017, if you owe the full interest or just interest on the balance.

Also I want to you to keep in mind that you're not using all of your money to pay bills, You need to have fun money to enjoy life.
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Old 06-10-2016, 09:22 AM
spcalan1 spcalan1 is offline
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Default Re: Better to pay off debt or pay additional to mortgage to get rid of PMI

Please call your bank and ask for it in writing.

I called the bank 3 times to see what my balance should be so PMI would drop off automatically.

They said 80% with an appraisal, 78% without an appraisal.
I was putting an extra $500/month to get to 78%.. when I got to 77% the PMI didn't drop off....

The 78% is based off the original amortization schedule ( that doesn't count ANY extra payments ).

Better get it in writing....
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Old 11-14-2016, 01:15 AM
Paul@GFS Paul@GFS is offline
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Default Re: Better to pay off debt or pay additional to mortgage to get rid of PMI

Yes, you may certainly ask them to give it in writing. Whether you start by paying off the CC or Mortgage, it all depends on how efficiently you can manage your finances. You must draw a clear picture of your entire financial situation in order to understand whether it's feasible for you to continue with your repayment method.
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Old 11-26-2016, 12:19 AM
Jovanny Jovanny is offline
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Default Re: Better to pay off debt or pay additional to mortgage to get rid of PMI

I would suggest you to pay off your debts.
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Old 11-28-2016, 05:17 AM
theviewabudhabi theviewabudhabi is offline
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Default Re: Better to pay off debt or pay additional to mortgage to get rid of PMI

It depends on the funds availability, if you have enough money to pay off the debts and still have enough money to survive until you can make another good saving level.
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Old 12-14-2016, 07:53 AM
Paul@GFS Paul@GFS is offline
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Default Re: Better to pay off debt or pay additional to mortgage to get rid of PMI

Quote:
It depends on the funds availability, if you have enough money to pay off the debts and still have enough money to survive until you can make another good saving level.
Yes, the availability of funds is an important point of consideration. You'll not only need a fixed amount, but it also has to come throughout the period of repayment. That's why it's really important to determine the nature and consistency of your income source.
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