How can you get rid of the PMI if you take out a loan on the entire appraised value? Won't that put you right back at 98/2 ratio and keep the PMI on the loan? Plus, since the loan amount is higher, the PMI would go way up. Not to mention your base payment would go way up as well. If you can afford all that extra payment, then you should be paying for the bathroom remodel in cash anyway.