🕺 How to Dance Away Your PMI Payment

Rates are flat, but your home equity might be surging. Here is the 4-step checklist to ditch mortgage insurance in 2026.

Author

Alex Veytsman
January 02, 2026

🎆 The Lending Letter 🏡

New Year, Same Rates: 2026 Kicks Off With Stability

Happy Friday and welcome to 2026! 🎉 While you were probably nursing a hangover yesterday (no judgment), mortgage rates decided to play it cool and stay exactly where they were. Literally. Zero movement. Like that one friend who says they'll help you move but then conveniently has "back pain" that day. 😏

But here's the thing: stability isn't boring when we're talking about rates in the 6% range. It means you can actually make plans without worrying about rates jumping while you're still trying to remember what year it is. ✨

📊 TODAY'S 30-YEAR FIXED RATE
6.20%
Unchanged from January 1 | Mortgage News Daily | As of 01/02/26

🎯 2026 Starts With a Rate Standstill (And That's Good News)

So what does it mean when rates don't budge? In mortgage land, it's actually a gift. The bond market took a collective breath after the holiday madness, and lenders are easing back into 2026 without any dramatic moves. Think of it as the financial markets doing some post-holiday yoga. 🧘

At 6.20%, we're sitting in what mortgage nerds call "the new normal zone." Not thrilling, but definitely workable. And here's your Friday truth bomb: everyone waiting for 3% rates to come back is like waiting for flip phones to make a comeback. It's not happening, folks. 📱❌

🎊 The January Jump Effect

Here's something most people don't realize: January is historically one of the best months to buy real estate. Why? Competition is lower (everyone's still in holiday mode), sellers who listed before the holidays are motivated, and there's a psychological fresh-start energy in the air. According to Realtor.com research, buyers who close in January often get better deals than those who wait until spring madness. 🌸

💰 Lender Promos: Start 2026 Right

🏠 Ready to Make Your Move? Whether you're buying your first home or your tenth property, we've got lenders lined up who are hungry to start 2026 with new deals. Fill out this quick form and let's match you with the right financing partner.

🏢 Investment Property Goals for 2026? New year, new rental portfolio. Smart investors are already scooping up deals while everyone else is still writing "2025" on their checks. Connect with investment specialists here who understand that Q1 is when fortunes are made.

🏖️ STR/Airbnb Empire Building? If your New Year's resolution included "build passive income," you're in the right place. Get connected with STR specialists who know how to structure loans for maximum cash flow. Your future self will thank you. 💪

🧠 Educational Corner: The Real Cost of PMI (And How to Ditch It)

Let's talk about PMI—Private Mortgage Insurance. It's that annoying extra monthly cost that shows up when you put down less than 20%. And most people think they're stuck with it forever. Spoiler alert: you're not. 🚫

Here's the breakdown that might blow your mind:

💡 The PMI Escape Plan

What It Costs: PMI typically runs 0.5% to 1% of your loan amount annually. On a $400,000 loan, that's $2,000 to $4,000 per year—or $167 to $333 per month. That's real money that could be going toward, you know, literally anything else. 💸

Automatic Removal: According to the Homeowners Protection Act, your lender MUST cancel PMI when your loan balance reaches 78% of the original home value. But here's the catch: that's based on your payment schedule, which could take years.

The Faster Way: You can request PMI removal once you hit 80% loan-to-value ratio. But here's the secret sauce most people miss: this can be based on your home's CURRENT value, not just what you paid. If your home has appreciated (and in many markets, it has), you might already be at 80% LTV without even knowing it. 🏠📈

The Action Steps:

  • Step 1: Check your current loan balance and original home value. Do the math: (Current Balance ÷ Original Value) × 100. If you're at or below 80%, you're in the game.
  • Step 2: If your home has appreciated significantly, order an appraisal (costs $300-500). According to Zillow data, many markets saw 5-7% appreciation in 2025 alone.
  • Step 3: Submit a written request to your lender with the appraisal showing 80% or less LTV. They typically have 30-45 days to respond.
  • Step 4: Watch that monthly payment drop and do a little victory dance. 🕺

Pro Tip: Some lenders fight this harder than others. If they're being difficult, cite the Homeowners Protection Act and remind them that you know your rights. Works every time. 😎

🏘️ Investor Intelligence: The 2026 Strategy Shift

Alright, real estate investors, gather 'round. We need to talk about what's different in 2026 and why your strategy needs to evolve. 🎯

1. The STR Market is Maturing
Short-term rentals aren't the Wild West anymore. According to AirDNA's latest data, successful STRs now need to compete on experience, not just location. That beach condo? Everyone has one. But a beach condo with a hot tub, chef's kitchen, and thoughtful design? Now we're talking. This is where working with STR specialists becomes crucial—they understand what separates 60% occupancy from 85% occupancy. 📊

2. Tax Strategy is More Important Than Ever
With rates in the 6% range, the math is tighter. This means maximizing tax advantages isn't optional—it's essential. Cost segregation studies can accelerate depreciation and put tens of thousands back in your pocket in year one. We're talking about potentially $30,000+ in tax savings on a typical rental property. That changes your ROI calculation significantly. 💰

3. The Amenity Arms Race
Here's where it gets interesting: the difference between a property that cash flows and one that crushes it often comes down to the right amenities. But buying furniture and upgrades upfront can drain your reserves. Enter the secret weapon: 0% interest funding for furnishing and upgrades. It's like using the house's future earnings to pay for its own upgrades. Smart money does this. 🧠

4. Market Selection Matters More
Not all markets are created equal in 2026. According to Forbes analysis, secondary markets with job growth and lifestyle appeal are outperforming traditional hotspots. Think Boise over San Francisco, Raleigh over New York. Lower entry costs, better cash flow, strong appreciation potential. That's the 2026 trifecta. 🎰

🎓 Personal Finance Hack: The Backdoor Roth IRA Move

🚪 The Retirement Account Loophole You Should Know

Let's talk about a completely legal way to fund a Roth IRA even if you make "too much money" to contribute directly. It's called the Backdoor Roth IRA, and it's one of those strategies that feels like cheating but is 100% IRS-approved. 🎩

The Basics: In 2026, if you're single making over $161,000 or married filing jointly making over $240,000, you can't contribute directly to a Roth IRA. But here's the workaround:

Step 1: Make a Non-Deductible Traditional IRA Contribution
Anyone with earned income can contribute up to $7,000 to a traditional IRA ($8,000 if you're 50+). You won't get a tax deduction if your income is high and you have a workplace retirement plan, but that's okay—we're not after the deduction. 💵

Step 2: Convert It to a Roth IRA
Almost immediately after (like, the next day), convert that traditional IRA to a Roth IRA. According to IRS guidelines, there's no income limit on Roth conversions. Since you just contributed and haven't earned anything yet, there are no taxes owed on the conversion. 🔄

Step 3: Enjoy Tax-Free Growth Forever
Now that money grows tax-free and comes out tax-free in retirement. Over 30 years, the difference between paying taxes on gains vs. not paying taxes is literally hundreds of thousands of dollars. NerdWallet's calculator shows that $7,000 growing at 8% annually for 30 years becomes $70,446—and in a Roth, you keep every penny. 📈

The Gotcha: This strategy works best if you DON'T have existing traditional IRA balances with pre-tax money (because of something called the pro-rata rule). If you do, talk to a CPA first—there are workarounds, but they're more complex.

New Year Action Item: Most people forget about this until tax season. Do it in January, and you've just given your future self a massive gift. Plus, you can do this every single year. That's potentially $7,000+ annually growing completely tax-free. 🎁

📊 What's Actually Happening in the Market Right Now

Let's cut through the noise with some real talk about January 2, 2026:

The Rate Reality
Rates at 6.20% with zero movement yesterday tells us the market is waiting. Waiting for what? The next batch of economic data, Fed signals, and job reports. According to Bankrate's analysis, this stability should last through at least mid-January. Translation: if you're rate shopping, now is actually a decent time—less volatility means easier planning. 📉

Inventory is Your Friend
Here's something interesting: Realtor.com data shows active listings are still elevated compared to 2024 levels. More inventory = more choices = more negotiating leverage. Especially in early January when sellers who've been sitting on the market are getting antsy. This is your window. 🪟

The Post-Holiday Lull
Traffic at open houses drops 30-40% in the first two weeks of January. Most buyers? They're still trying to return gifts and figure out what year it is. You, reading this newsletter? You're already ahead of 90% of the competition. That's an edge worth exploiting. 🎯

🤔 Should You Lock a Rate Right Now?

Everyone wants to know: is now the time? Here's the honest answer:

If you're actively shopping and have found a property, lock it. Rate stability is a gift—it means you can plan without worrying about rates jumping while you're in contract. According to Freddie Mac's rate forecast, volatility typically increases as we move deeper into 2026. 📊

If you're still searching, stay informed but don't stress. Rates aren't going to magically drop to 4% next week (sorry to burst that bubble 💭). But they also probably won't spike dramatically in January—economic data tends to be slower early in the year.

The Real Math: Every month you wait while analyzing rate predictions is a month of equity building you're missing. Even at 6.20%, real estate appreciation and tax benefits typically outpace the interest cost over time. The tax advantages alone can effectively reduce your true cost by 1-2%. That makes 6.20% feel more like 4.5-5.5%. Perspective matters. 🧮

🚀 Ready to Start 2026 Strong?

Here's your New Year game plan:

🌟 The Friday Bottom Line

Look, I'm not going to tell you that 6.20% rates are "amazing" or that this is "the opportunity of a lifetime." That would be ridiculous, and you're too smart for that nonsense. 🙄

But here's what IS true: rates are stable, inventory is decent, competition is low, and we're in the first week of a new year when people are actually motivated to make changes. That's a pretty solid combination if you're serious about building wealth through real estate. 💪

The people who win in real estate aren't the ones who time the market perfectly (because newsflash: nobody does that consistently). They're the ones who take action when conditions are reasonable and hold long enough for the magic of equity, appreciation, and tax benefits to compound. According to Zillow research, the median homeowner has built $300,000+ in wealth through real estate. That doesn't happen by waiting for perfect conditions—it happens by starting and being patient. 🏆

So whether you're buying your first home, adding to your rental portfolio, or finally pulling the trigger on that STR property you've been eyeing, remember: The best investment you can make is often the one you're ready to make RIGHT NOW. (Assuming the numbers work, obviously. We're optimistic here, not reckless. 😂)

Happy Friday, happy New Year, and let's make 2026 your best real estate year yet. Even if rates aren't perfect, opportunities are everywhere for those paying attention. 👀✨

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See you tomorrow (Saturday) for another dose of mortgage market wisdom!

Disclaimer: This newsletter is for informational and entertainment purposes only. Rates and terms vary by lender and borrower qualifications. Always consult with a licensed mortgage professional, tax advisor, and financial planner for your specific situation. The strategies discussed require careful consideration of your personal financial circumstances and risk tolerance.