I've read the other posts on here about removing PMI but i'm struggling to work out how best to calculate what % intesret that PMI is costing me, and then compare it to the lost opportunity cost of investing whatever i put into VTSMX if i was to pay down some mortgage principal early. Is removing PMI a hair on fire emergency?

What parts of PMI Payoff ROI? or Getting rid of PMI? What % "return" would I get for paying down my mortgage? need elaboration?

Well i tried doing it both your way MDM:Another way to look at it:

Without PMI, the monthly payment on a 30 year $402, 383 loan at 3.75% is $2027.51. In the first month, the interest charge is $402, 383 * 3.75% /12 = $1259.34. Treating the PMI as interest, the effective rate for the first month is ($1259.34 + $161.20) / $402, 383 * 12 = 4.23%,

By the 15th payment, as the remaining balance and thus the non-PMI interest amounts change, a similar calculation gives ($1232 + $161.20) / $402, 383 * 12 = 4.15%. The percentage increases slowly over the years.... Yeah this one decreased for me so doing something wrong…..

The annualized ROI for ridding oneself of PMI is $161.20 * 12 / (current balance (393, 683) - $339200). = 3.55%?

3.55% = 3.75% = 7.3% to get rid of the PMI….

**And Nawhite's way:**It depends on how much money you have to pay to hit 80% LTV.

You need to pay off an additional $54, 483 before you lose the PMI. In this case, think about it like a loan for $11,990 with an interest rate of 3.5% plus a fixed rate of $59.95/month. So yearly, the cost to carry this loan of $11,990 is:

161.20*12= $1934.4

1934.4 / 54, 483 = 3.55%

3.55% + 3.75% = 7.3% (so every dollar you put towards this loan gives you a risk free return of at least 7.3%)

**And yes eventually i got to the same 7.3%return to get rid of it, but the increasing % you closer to get isn't working for some reason the way i did it with yours. See above with my numbers in both scenarios....**So - assuming that i calculated correctly that at it's best stage (present day), PMI is costing me 7.3%, and we estimate 7% as the average return for a VTSMX investment, and the return on the PMI payoff is guaranteed - i should focus on getting rid of PMI over a normal taxable investment?

Then once PMI is gone, normal Taxable investment is likely the better bet, as from that point, i'll only be getting back the 3.75% interest on the loan post PMI?