PMI Cancellation on Rental Property

[Andreas Wilder]

Hello all,

Looking for information as it relates to the cancellation of PMI on a property that was bought as a SFH and then converted to rental. I am thinking of renting out my current primary residence in May 2019. My PMI is eligible to be cancelled in March 2020 (80% of LTV based on original value) by request. The issue is on my mortgage holder's site, it states the following:

"According to the Homeowners Protection Act of 1998, examples of conditions that would prevent the cancellation of mortgage insurance include, but are not limited to: a non-owner occupied residence"

So does my mortgage holder have the right to not cancel PMI, even though it has reached 80% LTV? what about at 78% LTV (September 2020).

I also have the following options, which I would be interested in some opinions on:

1) pay down the loan to 80% LTV before I rent it out and request cancellation of PMI before May.

2) request to cancel PMI now (mortgage balance is $191K and increased value of home is around $255k). -> this would run me an appraisal fee of around $600, which almost makes it not worth it when the 80% LTV is up in march 2020.

3) refinance loan (probably not worth it consider my interest rate is 3.65%).

Thanks in advance.