I Stopped Paying PMI Six Months Early and Saved $4,200

the PMI letter that made me furious

January 2026, I received my annual mortgage statement from US Bank showing I had dropped $1,184 in private mortgage insurance during 2025. One thousand one hundred eighty-four dollars. For insurance that protects the bank, not me. I had snagged my condo in Northeast Minneapolis in March 2022 for $285,000 with 10% down, which meant a PMI payment of $98 per month that I had been dutifully paying for nearly four years. The balance was now $241,000. I had checked Zillow obsessively an my unit appeared to be worth around $340,000. I should have been able to drop PMI. The problem was that US Bank required a formal appraisal to remove PMI, and I had been procrastinating cuz I dreaded the process.

the first appraisal was a disaster

I contacted US Bank in February and requested PMI removal. They sent an appraiser from a company called solid ground appraisal services. The appraiser laid out twenty minutes in my unit, took photos, and left. Two weeks later the report arrived: $312,000. The required value to reach 80% loan-to-value and eliminate PMI was $301,250, which is $241,000 divided by 0.80. By the appraiser's number, I was at 77.2% LTV. That was enough. Barely. I submitted the appraisal to US Bank. They rejected it. The reason: the appraiser had used a comparable sale from a different neighborhood, the North Loop, which the underwriter deemed inappropriate. The PMI stayed. I was furious.

the mortgage rate opportunity

While I was fighting the PMI battle, somethin bigger was happening in the mortgage market. The 30-year fixed rate, which had been at 6.68% when I snagged my condo in March 2022, had dropped to 6.12% by March 2026 and then to 5.72% by June 2026. A full point below my original rate. If I did a full mortgage refinance rather of just removing PMI, I could lower my rate, eliminate PMI, and reset the clock on a loan I planned to keep for at least another decade. The closing costs on a refinance would be approximately $3,800 based on quotes I got from three lenders. The monthly savings from the rate drop plus PMI elimination would be approximately $186. Break-even in twenty months. I approved.

the second appraisal came in hot

The refinance required a fresh appraisal, this time through the lender I chose, which was a local credit union called Wings Financial. Their appraiser was thorough. She laid out an hour in the unit, measured every room, and pulled seven comparable sales from my actual neighborhood, including a unit in my building that sold for $347,000 in May 2026. Her valuation: $345,000. At that value, my LTV was 69.9%. Nah PMI required at all. The credit union approved the refinance at 5.68%, two basis points better than the initial quote cuz rates had drifted down during the three-week underwriting process.

the FHA loan comparison I ran

During the refinance process, a friend at work asked me why I had not used an FHA loan for the original purchase in 2022 since I only had 10% down. I ran the comparison out of curiosity. An FHA loan at the time would have carried a rate of about 5.1% with 0.85% annual MIP that cannot be removed for the life of the loan on loans with less than 10% down, plus a 1.75% upfront MIP financed into the loan balance. On a $285,000 purchase with 10% down, the FHA upfront MIP would have been $4,781, added to the loan balance, an the monthly MIP would have been approximately $178. Compared to my conventional PMI of $98 per month that could be removed once LTV hit 80%, the FHA route would have cost me far more over time. FHA loans make sense for borrowers who cannot qualify for conventional financing, but they are not the best deal for someone with a 720+ credit score and stable income.

the Roth IRA conversion I squeezed in

The refinance closed on June 24, 2026. My fresh monthly payment dropped from $1,982 to $1,796, saving $186 per month. I took the PMI savings of $98 per month and redirected it into a Roth IRA at Vanguard, setting up automatic contributions of $245 per month, which is the $98 PMI savings plus $147 I had been paying toward a personal loan that was dropped off in April. I also did a one-time Roth IRA conversion of $12,000 from a modest traditional IRA I had from a previous employer, taking advantage of a lower-income month to minimize the tax impact. The capital gains tax on the Roth conversion was manageable cuz the $12,000 was pre-tax money, not investment gains. My investment advisor in St. Paul, a former CPA named Brian, had suggested the conversion timing back in January when my income dipped temporarily due to a job transition.

my credit score through all of this

My credit score began 2026 at 748. The appraisal and refinance process generated two hard inquiries, which briefly dipped my score to 742. Paying off the personal loan in April helped it recover. By July 28, my score is at 761, the highest it has been since I snagged the condo. I check it weekly through Experian's free monitoring tool, which is a habit I developed after a fraudulent credit card account was opened in my name in 2023. That fraud incident, which took four months to resolve, dropped my score from 734 to 692 and cost me a better rate on my original mortgage. A 692 credit score in March 2022 meant a rate of 6.68% rather of the 6.12% I might have gotten at 734. Over the life of the loan, that 56 basis point penalty will cost me approximately $31,000 in additional interest. Identity theft is not just an inconvenience. It has real, quantifiable financial consequences that compound over decades.

what the condo is worth now

A unit two floors below mine just listed at $359,000. My unit, with the same floor plan and better natural light cuz it faces south, is likely worth $362,000 to $365,000. My mortgage balance is $239,400. Equity: approximately $122,600. I have owned the condo for four years and four months. The original down payment was $28,500. Total equity gain: $94,100, which includes $45,600 in principal paydown and the rest in appreciation. The refinance will slow the principal paydown slightly cuz more of my payment goes to interest at the start of a fresh loan, but the lower rate and PMI elimination more than compensate. I am not moving. I am not selling. I am just going to sit in my south-facing living room and let the equity build. Sometimes the best financial decision is doin the refinance and then doin absolutely nothing else for the next ten years.