Fastest way to hit 20% Loan To Value and drop PMI

[Mathew Fuller]

Hello,

I just bought my first property in Fort Collins, Colorado with a 3% down payment conventional loan. I am wondering what kind of strategies I can use to hit that 20% LTV the fastest?

I am going to rent out two of the three bedrooms (house hacking).

I’ve already made a number of cosmetic improvements to the property (garage door opener, replaced the skylight, soon to refinish the hard wood flooring, will paint and refinish the walls, etc)

I plan on adding a 4th bedroom to the basement space. Making the property a 4 bed 2 bath home.

I plan on contributing the max I can along with tenant money to paying down the loan faster outside of my savings and retirement accounts.

What else should I be thinking about? I have about $63k I need to hit that mark and I’d like to get it by end of next year.

[Brian Ellis]

I would caution about the 4th bedroom idea, make sure that the septic design (if it has one) and town would approve the addition. Also, appraisers wont consider a basement room a bedroom unless it is above a certain amount of lawn grade (at least here in MA).

Improvements will help, but unless it was a really beat up home, and you got it for well below market value, adding 63k in equity might be tough. Im in the same position as you are right now.

Tidy up the landscaping make it appealing from the exterior. Work on bathroom, kitchen, flooring, painting, & recessed lighting (makes a huge difference). Be patient and make sure its complete before you order an appraisal, otherwise you will be out the $500!

Good luck