Advice/Thoughts needed: eliminating PMI with payment from HELOC

[Andrew K.]

Greetings! Scenario: Bank A holds my mortgage with a 2.875% interest rate. My mortgage has private mortgage insurance (PMI) on it with a monthly charge of $91. My current LTV is approx. 45%. Bank B holds my HELOC with a adjustable interest rate, currently set at 4%. Currently zero balance. Upon any draw from the HELOC, required monthly payments are 1% of the remaining balance (i.e. $10k balance would require a $100 payment for Month 1, then $99 payment Month 2, etc..). So, I called Bank A to inquire about eliminating my PMI. They told me that my loan balance would have to be down to a certain point, then PMI will drop off automatically. To get to that certain point, I can either wait till it naturally occurs by making my normal monthly mortgage payments, or I could accelerate it to that point by making an additional principle payment of about $8900 now. So I thought about it: what if I draw $8900 from my HELOC to use to pay down my mortgage balance. That would eliminate my PMI (saving 91 monthly), and I would be paying $89 a month ($30 of which would be interest charge). So, I'd be paying down my HELOC principle balance every month (as required). The way I see it, is that I'd be effectively replacing a $91 interest charge with a $30 interest charge. And at the same time, I'd be paying down the principle on both loans, thus reducing the interest charges on those as well. I have a habit of getting "analysis paralysis" and I think I'm at that point now. Does anyone have any thoughts/advice about this? Am I thinking about it right? Sorry for the long post, just wanted to be thorough. Many thanks! Andrew