Imagine yourself nearing retirement.
In 25 or 30 years, that could be ~ 50K (assuming reasonable, not excessive returns).
Wouldn’t you rather have those funds for maybe a few months of food and property tax, so that you can remain in the home you are currently paying PMI on.
On the other hand, if you are in a position where you could eliminate PMI by using these funds to pay down principal, that could work, assuming that you pay yorself back by funding an IRA for the next couple opf years.
Of course, you will be taxed at your income tax rate plus a 10% pentaly, so you might only end up with $9K or so to spend (if you are in a marginal 15% tax bracket)
