Author Topic: Help, Refinance now or wait 12 months for PMI to come off?  (Read 2264 times)

JJ saves

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Help, Refinance now or wait 12 months for PMI to come off?
« on: July 29, 2016, 06:08:45 PM »
I purchased my home for 195,000, 30yr fixed FHA loan @ 4 percent with PMI insurance for five years. I owe 160,000. It is appraised for 280,000. Currently my payment is 1,467 including taxes/ insurance. My PMI being 180. I would like the PMI to come off and lower my payment

Ive been given the option to Refinance @ 3.875 30 yr conventional fixed which would drop my payment to 1,164. However closing cost (6000) would be rolled into the new loan which would total 166,000.



If I did not refinance I would still have to pay PMI for another 12 months which equals 180x12=2,160.


Old payment- 1,467
New payment-1,164
Saving          - 303

Payment without refinance in 12 months -1,287.

I feel like refinancing is the better option but the 6,000 closing cost is what Im not a big fan of. Do you guys think its a good decision?  Should I wait for the PMI to come off first then refinance to get a possibly lower payment?

Thanks!
« Last Edit: July 29, 2016, 06:16:11 PM by JJ money »

katsiki

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #1 on: July 29, 2016, 06:16:51 PM »
Have you looked at other lenders?  You should be able to find a no cost loan for around the same rate or better.


JJ saves

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #2 on: July 29, 2016, 06:23:02 PM »
Have you looked at other lenders?  You should be able to find a no cost loan for around the same rate or better.


I have not. My loan is with Wells Fargo and the offer is through Wells Fargo. I started the new loan process but the closing cost is making me seek advice.

Thanks

katsiki

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #3 on: July 29, 2016, 06:28:39 PM »
I would look around a bit.  Many people recommend using Zillow to obtain a few quotes.  Also, a national company like Quicken Loans is an option.  I have refi'd with them a couple of times now and never had any issues.  At the moment, it looks like they would beat the rate Wells Fargo quoted you.

Good luck!

JJ saves

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #4 on: July 29, 2016, 06:43:28 PM »
I would look around a bit.  Many people recommend using Zillow to obtain a few quotes.  Also, a national company like Quicken Loans is an option.  I have refi'd with them a couple of times now and never had any issues.  At the moment, it looks like they would beat the rate Wells Fargo quoted you.

Good luck!

Thanks you for the advice. I will check them out

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #5 on: July 29, 2016, 07:18:01 PM »
NEVER use Quicken Loans.  They are NOT a low cost provider.  Instead, check out Aimloan.com and a few of the other low cost online lenders.  Also Penfed credit union - it's easy to qualify for membership.  If you have a credit score of 760 or above, you should qualify for the best rates.  Lower score at PenFed.  Should be 3.375 percent or less with much lower closing costs for a 30 year fixed rate loan.

JJ saves

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #6 on: July 29, 2016, 07:21:24 PM »
NEVER use Quicken Loans.  They are NOT a low cost provider.  Instead, check out Aimloan.com and a few of the other low cost online lenders.  Also Penfed credit union - it's easy to qualify for membership.  If you have a credit score of 760 or above, you should qualify for the best rates.  Lower score at PenFed.  Should be 3.375 percent or less with much lower closing costs for a 30 year fixed rate loan.

My credit score is 790. The one thing I like about Wells Fargo is they pay my insurance and taxes with my mortgage. A one stop shop payment. I also do Bi-Weekly. If I did go to another lender would they be able to set up the same thing?

Thanks

katsiki

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #7 on: July 29, 2016, 07:29:50 PM »
Most will do that.  Even QL :)

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #8 on: July 29, 2016, 09:11:18 PM »
This is called an impound account and almost all lenders require one or will charge a higher rate or an extra fee to avoid impounding.  Bi-weekly is a gimmick that they probably charged extra for as well.  26 biweekly payments equal 13 monthly payments.  You can accomplish the same thing by making an extra mortgage payment during the year.

JJ saves

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #9 on: July 29, 2016, 09:32:02 PM »
This is called an impound account and almost all lenders require one or will charge a higher rate or an extra fee to avoid impounding.  Bi-weekly is a gimmick that they probably charged extra for as well.  26 biweekly payments equal 13 monthly payments.  You can accomplish the same thing by making an extra mortgage payment during the year.

I do not pay nor is there a fee for Bi-weekly payments with Wells Fargo. Good to know most lenders offer impound accounts.
Thanks

BlueHouse

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #10 on: July 29, 2016, 10:01:24 PM »
Am I reading your post correctly in saying that you are 4 years into a 30 year loan but by refinancing you'll be back to another 30 year term?  Be careful with that and make sure you calculate the cost of the total loan term (not just monthly payment) when calculating your ROI.

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #11 on: July 29, 2016, 11:03:55 PM »
Am I reading your post correctly in saying that you are 4 years into a 30 year loan but by refinancing you'll be back to another 30 year term?  Be careful with that and make sure you calculate the cost of the total loan term (not just monthly payment) when calculating your ROI.

Wouldn't any loan you ReFi start over again 30yr, 20yr, or 15yr depending on which one you pick?

I have run the numbers and it seems to work for me but not sure if I am missing something.
12 months left on my PMI equals 180x12months= 2160
              New Payment savings  300x 12 months= 3600
                                              One year savings = 5760
The way I see it is after one year and two months the 6,000 closing cost is paid for and I pay 300 monthly less for the duration of loan which allows me to add more to the principal or invest in my index funds.

gardeningandgreen

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #12 on: July 30, 2016, 08:20:44 AM »
Am I reading your post correctly in saying that you are 4 years into a 30 year loan but by refinancing you'll be back to another 30 year term?  Be careful with that and make sure you calculate the cost of the total loan term (not just monthly payment) when calculating your ROI.

Wouldn't any loan you ReFi start over again 30yr, 20yr, or 15yr depending on which one you pick?

I have run the numbers and it seems to work for me but not sure if I am missing something.
12 months left on my PMI equals 180x12months= 2160
              New Payment savings  300x 12 months= 3600
                                              One year savings = 5760
The way I see it is after one year and two months the 6,000 closing cost is paid for and I pay 300 monthly less for the duration of loan which allows me to add more to the principal or invest in my index funds.


Yes your actual money out the door is less with the new loan but you have to look at the cost of interest over the life of the loan. The payments may be less but the overall cost may not. PMI should be avoided at all costs but extending your loan may not be the best option. If you can afford slightly higher payments go to a 20 year loan. You should be able to get a no closing cost loan for a lower interest rate and no PMI.

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #13 on: July 30, 2016, 12:47:29 PM »
Am I reading your post correctly in saying that you are 4 years into a 30 year loan but by refinancing you'll be back to another 30 year term?  Be careful with that and make sure you calculate the cost of the total loan term (not just monthly payment) when calculating your ROI.

Wouldn't any loan you ReFi start over again 30yr, 20yr, or 15yr depending on which one you pick?

I have run the numbers and it seems to work for me but not sure if I am missing something.
12 months left on my PMI equals 180x12months= 2160
              New Payment savings  300x 12 months= 3600
                                              One year savings = 5760
The way I see it is after one year and two months the 6,000 closing cost is paid for and I pay 300 monthly less for the duration of loan which allows me to add more to the principal or invest in my index funds.


Yes your actual money out the door is less with the new loan but you have to look at the cost of interest over the life of the loan. The payments may be less but the overall cost may not. PMI should be avoided at all costs but extending your loan may not be the best option. If you can afford slightly higher payments go to a 20 year loan. You should be able to get a no closing cost loan for a lower interest rate and no PMI.

Thank you for the advice on the interest over the duration of the new loan. I have heard the term ( no closing cost loan) and I'm a bit confused. I've read that a ( no closing cost loan) means they roll it into your new mortgage. Are lenders actually not charging closing cost?

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #14 on: July 30, 2016, 06:55:41 PM »
Mortgages are priced with different options.  You can pay closing costs, have the costs rolled into the loan, or you can pay a higher rate and less in closing costs.  Look at how points are matched to rates on the aimloan page.  More in points means a lower interest rate.  This makes it more difficult to comparison shop, but it can be done.  Decide what you want to do, and then ask for the same thing from each lender.  For example: what are the rate and closing costs if I do not want to roll any costs into the loan and I want to pay zero points?  Then pit the best offers against each other and see who is the lowest for what you want.

fishnfool

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #15 on: July 31, 2016, 09:22:50 PM »
I'm 2/3rds the way through a refi with Aimloan, so far it has gone pretty smoothly, their fees and interest rate was better than Wells F.

Now just hoping to beat the rate lock expiration!


gardeningandgreen

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Re: Help, Refinance now or wait 12 months for PMI to come off?
« Reply #16 on: August 01, 2016, 11:19:38 AM »
Am I reading your post correctly in saying that you are 4 years into a 30 year loan but by refinancing you'll be back to another 30 year term?  Be careful with that and make sure you calculate the cost of the total loan term (not just monthly payment) when calculating your ROI.

Wouldn't any loan you ReFi start over again 30yr, 20yr, or 15yr depending on which one you pick?

I have run the numbers and it seems to work for me but not sure if I am missing something.
12 months left on my PMI equals 180x12months= 2160
              New Payment savings  300x 12 months= 3600
                                              One year savings = 5760
The way I see it is after one year and two months the 6,000 closing cost is paid for and I pay 300 monthly less for the duration of loan which allows me to add more to the principal or invest in my index funds.


Yes your actual money out the door is less with the new loan but you have to look at the cost of interest over the life of the loan. The payments may be less but the overall cost may not. PMI should be avoided at all costs but extending your loan may not be the best option. If you can afford slightly higher payments go to a 20 year loan. You should be able to get a no closing cost loan for a lower interest rate and no PMI.

Thank you for the advice on the interest over the duration of the new loan. I have heard the term ( no closing cost loan) and I'm a bit confused. I've read that a ( no closing cost loan) means they roll it into your new mortgage. Are lenders actually not charging closing cost?

Yes there are lenders not charging closing costs. The interest rate is a little higher but depending on how long you plan on living in the house it sometimes makes more sense to pay .5% higher interest than to pay the closing costs upfront.