Okay, so my wife and I did an Anti-Mustachian thing and bought a home with a 5% down FHA (about 2 years ago). In my defense, I did not find this blog until a few months ago, and only now recognize the error of our ways...
Anyway, the reason for this post is a question about PMI rules/laws. I recently attempted to refinance our 5% Interest rate mortgage. The problem that I ran into, is apparently PMI changes that went into affect in April 2012 (?) require a higher per month PMI payment. So, even though refinancing would've saved us about $400/month, the additional PMI costs would've been an additional $300, and with an FHA loan, you can't refinance if there is not a 5% or greater savings (if I'm remember correctly).
I know that one way to combat this is to pay down our mortgage to the point where PMI goes away, and then refinance. Of course, the risk here is that interest rates could go back up by the time we pay it down that far. Has anyone else run into this, and are there any other avenues we should pursue, or just focus on bring down the principle?
Appreciate any input.