Primary Mortgage Insurance (PMI) is a payment with which most new homeowners must contend. Generally, you have to pay PMI if your equity (i.e., your down-payment on a new purchase) is below a certain threshold. For many people, that can be worth it, because in exchange for a nominal increase in monthly payment (the PMI), you may be able to purchase much more home than you could if you were required to put 20% down. But just because it can be a good idea up front doesn’t mean you should keep paying it for ever. The Iowa Gazette provides a quick little case-study that contrasts paying enough more towards your mortgage to remove PMI vs. putting more into your 401k. It’s well worth the read.
