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My husband and I are following the Dave Ramsey “Total Money Makeover”, but instead of paying off lowest balances we are paying off highest interest rate first. Dave suggests that you pay off all your consumer debt, fund your savings account, make sure you are funding your retirement account 15% and then pay off the mortgage.

With all of this said we will be completely debt free including the mortgage and have a funded savings account by August 2017.

The question we have is the without adding any money to our mortgage payment, we are paying PMI until we get to 85% Loan to Value of $ 90.67 per month until December 2016. And then the PMI gets reduced to $ 22.67 per month until June 2020.

We will be able to start ‘snowballing’ onto our mortgage in January 2015, which of course will get rid of the PMI ahead of schedule. But since we are getting no equity on the PMI payments, should we add a monthly mortgage principle only payment now to help get rid of the PMI sooner while mainly focusing on the other debt first?

1 Thought on Paying PMI on mortgage and doing snowball debt reduction?
  1. Reply
    MVD34
    February 28, 2014 at 6:27 am

    No, you are taking the simplicity of Dave’s plan and over thinking it into a complicated mess.

    Follow the plan.

    Dave’s plan works for most people because it applies the basic rules of finance in a straight forward way so that they can follow it. That is, so they don’t have to know or understand all the complex rules behind why it works.

    In the first place, you are five years out. Way, way too far to worry about such things. When you are five years in, you will likely understand the answers to your own questions.

    In the second place, you aren’t getting any “equity” on your mortgage interest payment either…which is significantly larger than you PMI payment every month…isn’t it…? Don’t miss the forest for the trees.

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