Author Topic: Getting out of PMI  (Read 1339 times)

dividendsplease

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Getting out of PMI
« on: January 22, 2017, 11:21:28 AM »
Hi all! DW and I have a FHA loan at 3.75% fixed. PMI is on it for life in FHA and I want to get out of it.

From my understanding there's no way out of PMI in an FHA loan. Is that correct?

If we look into refinancing is the 20% equity from the original loan balance or current appraised value?

Thanks!

COEE

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Re: Getting out of PMI
« Reply #1 on: January 22, 2017, 06:28:04 PM »
You have to have 80% loan to value to get PMI removed when you originate a loan.  I believe there are laws about lenders having to remove PMI if you hit 75ish% loan to value unless it is a FHA loan.  This is always debatable.  I was able to get pmi removed from a fha loan once because i had 75% l2v and my interest rate was a couple of percentage points higher than the current rate.  It worked well for me at the time because i was expecting to move so refinancing would have been smart but an inconvenience.  I would have refinanced if they hasn't stopped the pmi... And they knew it.  They wanted to keep the business.

Loan to value has to do with the current value and current loan amount.

If you're planning on staying where you are I'd suggest refinancing to a 15 year note.  I recently bought a home with a sub 3% interest rate from an online lender.

I would not suggest a online lender in a purchase Because timing is so important and they did drag their feet a couple times, but a refinance i highly recommend it.

Another Reader

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Re: Getting out of PMI
« Reply #2 on: January 22, 2017, 06:46:08 PM »
Recent FHA loans have MI for life.  You need to refinance to a non-FHA loan to get out of MI.  Private Mortgage Insurance (PMI) has different rules that vary with the lender and the insurer.

If you have a solid 20 percent equity in your home. it likely makes sense to refinance.  Adding your MI payment to your principal and interest payment and working backwards using your original principal will give you your equivalent interest rate.  The current MI payments can jack up your imputed interest rate significantly.  As long as you can reduce that imputed interest rate enough to make the refi make sense, I would do it.

Ebrat

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Re: Getting out of PMI
« Reply #3 on: January 24, 2017, 07:54:15 AM »
The 20% equity would be from the appraised value if you refinance. If you don't have 20% equity, you might be able to refinance into a conventional loan with PMI.

Overflow

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Re: Getting out of PMI
« Reply #4 on: January 24, 2017, 09:03:19 AM »
Hi all! DW and I have a FHA loan at 3.75% fixed. PMI is on it for life in FHA and I want to get out of it.

From my understanding there's no way out of PMI in an FHA loan. Is that correct?

If we look into refinancing is the 20% equity from the original loan balance or current appraised value?

Thanks!

I am in this same situation. Have an FHA loan with over $100 in PMI a month. I have only owned it for 5 months, and starting explore refinance options.

- You can refi to a conventional loan if you have 85-90% LTV. You will still carry PMI, but it will drop off when you hit 80% (or there abouts). From the quotes I received most  PMI on conventional were cheaper than FHA. Instead of 100+ i got quotes for $60-90 a month. Even if you interest rate is a bit higher it will likely end up cheaper in the long run (lower PMI with eventually no PMI).


- I found out if you have owned the home for less than 6 months (sometimes a year) the appraised value is the purchase price. Only after a 6 months can you get a revised appraisal. So I need to wait a few more months to get a reappraisal and hopefully better LTV.