They are correct that you should refinance to get rid of PMI. PMI is a waste of money for you, and only helps your lender. If you default, they get paid. You get nothing. Your only benefit was when they gave you a mortgage with low downpayment.

Ask what kind of deal they would give you, including rate, finance charges, etc. Then shop around. They may give you lower finance charges since they already own your mortgage, but it never hurts to look around. Unless your state allows early pay off penalties, and most states ban that, you can go with any company that would pay them off.

Also see what your payments would be with a shorter mortgage. You would get a lower rate with quicker equity building. The only downside is a higher payment and smaller tax deduction due to smaller interest payments.